India will surpass China to become the second largest oil demand growth center globally, behind only the US, in 2019, research and consultancy group Wood Mackenzie said. The report said that India’s demand for oil will be driven by auto fuel and residential LPG consumption. India's oil demand growth contributed 14% of the global demand growth or 2,45,000 barrels per day. According to the US Energy Information Administration (EIA), India is currently ranked behind the US and China as the world's third-largest oil consumer. It consumed 206.2 million tonnes (over 4 million bpd) in the 2017-18 fiscal year.
Oil prices firmed on Monday after data showed China's economic slowdown was not as big as some analysts had expected, with supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) also offering support. International Brent crude oil futures were at $62.83 per barrel up 13 cents, or 0.2%, from their last close. U.S. West Texas Intermediate (WTI) crude futures were at $53.92 a barrel. Both oil price benchmarks were trading lower earlier in the session on fears that China's economic slowdown. China's economy grew by 6.6 percent in 2018, its slowest expansion in 28 years.
Oil prices fell on the back of signs of an economic slowdown stoking concerns over the future demand for oil. International Brent crude oil futures were at $62.26 per barrel at 0410 GMT. "After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising," IMF Managing Director Christine Lagarde told reporters. Singapore-based brokerage Phillip Futures on Tuesday said that supply cuts by OPEC would, however, provide a base price support.
Oil prices fell on Thursday as US crude production neared an unprecedented 12 million barrels per day (bpd). American crude oil production reached a record 11.9 million bpd in the week ending January 11, the Energy Information Administration (EIA) said on Wednesday, up from 11.7 million bpd last week, which was already the highest national output in the world. Crude oil exports from the US have also grown to hit a record 3.2 million bpd by the end of last year.
Oil prices slipped on Friday as concerns over economic growth resurfaced after inconclusive trade talks between the US and China ended on Wednesday. However, OPEC-led production cuts boosted sentiment in crude markets. Oil prices were also supported by comments from US Federal Reserve Chairman Jerome Powell on Thursday that the US central bank could pause any further interest rate hikes. Asia’s Iranian oil imports were set to rise from December onwards as the United States granted temporary waivers to some countries from sanctions against Iran’s oil exports. International Brent crude futures were at $61.22 per barrel at 0139 GMT.
Indian rupee has turned into the worst performing Asian currency from being the best just two weeks back. A rebound in global oil prices and concerns over farm loan waivers has reversed the gains made by the domestic currency. Funds are instead accumulating the Indonesian rupiah and Chinese yuan on optimism over trade talks and signs of a Federal Reserve rate hike pause. India relies on oil imports to meet about 80% of its requirements. Every $10 rise in oil prices widens the current-account gap by $12.5 billion, according to a central bank study.
Oil prices crashed by more than 1% on Thursday after analysts warned of an economic slowdown in 2019. International Brent crude futures were down 51 cents, or 0.9 percent, at $54.40 per barrel. Stock and currency markets remained extremely volatile after the US Dollar crashed more than 3% against the Japanese Yen and US tech giant Apple cut its sales forecast. The slowdown in China and turmoil in stock and currency markets is making investors nervous, including in oil markets.
India remained ahead of China to retain the tag of the world’s fastest growing large economy despite global factors such as surge in global oil prices, strengthening US dollar, the US Federal Reserve hiking interest rate for the fourth time in a year and US-China trade war during 2018. The Indian economy registered an impressive GDP growth rate of 8.2% in the quarter ended June 30 of fiscal 2018-19 though the growth rate slipped to 7.1% in the second quarter. According to Niti Aayog Vice-Chairman Rajiv Kumar, the government is targeting GDP growth rate of 7.8% in calendar year 2019.
Foreign portfolio investors (FPI) have infused more than Rs 5,400 crore in the Indian capital markets this month so far due to the persistent drop in global crude oil prices and strengthening rupee. According to data available with the depositories, FPIs put in a net amount of Rs 1,900 crore in equities and Rs 3,577 crore in the debt markets, taking the total to Rs 5,477 crore during December 3-28.
Petrol prices were at the cheapest levels in 2018 after the oil marketing companies (OMCs) once again slashed petrol and diesel prices by nearly 30 paise on Saturday. While petrol is selling for Rs 69.26 per litre and diesel for Rs 63.32 per litre in the national capital Delhi today, in Kolkata, petrol and diesel are selling for Rs 71.37 per litre and Rs 65.07 per litre, respectively.
The partial shutdown of the US government, trend in crude oil prices and rupee movement may dictate the direction of the equity market in the coming week. Markets may also witness added volatility due to the expiry December series in the derivative segment. Global markets have also been jittery over reports of Donald Trump planning to sack Federal Reserve chairman Jerome Powell due to the recent interest rate hike. However, recent fall in crude oil prices, pick up in industrial production, softening of CPI inflation and the recent GST rate cut announcements may cheer up the Indian equities.