BRENT CRUDE OIL

By:
Nishidh Shah
M.B.A-F.S-24

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Contents

1 Commodity

2 Crude Oil

3 Product Profile

4 Contract Specification

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 What is commodities?
• Commodities are things of value, of uniform quality, that were
produced in large quantities by many different producers; the
items from each different producer are considered equivalent.

• It is the contract and this underlying standard that define the

commodity, not any quality inherent in the product.

• Commodities exchanges include:

 Chicago Board of Trade
 Euronext.liffe
 London Metal Exchange
 New York Mercantile Exchange
 Multi Commodity Exchange
 Dalian Commodity Exchange
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Commodities products

3 Main product categories;

• Agricultural Products
• Metal and Minerals
• Oil and Gas

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Composite of each group

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CRUDE OIL

 Basically 3 types of crude oil

1)West taxas Intermidiate:- one of the largest
traded commodity in the world. Gravity is
between 37 to 42 degree.
2)Brent crude oil:- it is second most traded
commodity in the crude oil in the world gravity is
39 degree
3)Middle east crude oil:- variety with large
physical market. Most of Indian refineries use
crude bench mark against middle east crude oil.
Gravity is 31 to 37 degree.
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PRODUCT PROFILE

 Mixture of hydrocarbon that exist in a liquid form.

 It accounts for 40% of world primary energy
consumption.
 All industries are directly or indirectly dependent
on derivatives from crude oil. and price movement
affect prices of lubricant, petrochemicals.
 The prices of crude are highly volatile. High oil
prices lead to inflation which increases input cost,
and reducing non-oil demand.

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 General charctstics
 light sweet crude oil from North Sea. It has API gravity
between 38-39 and has higher sulphur content
 Brent crude oil is a global benchmark for other grades and
is used to determine crude oil prices in Europe and in
other parts of the world.
 Brent is typically refined in Northwest Europe, but a
major portion is been exported to the US Gulf and East
Coasts, and also to parts of Mediterranean.
 It is more expensive than the Organization of Petroleum
Exporting Countries (OPEC) basket, but lesser than West
Texas Intermediate (WTI) because of higher sulphur
content than the WTI crude.
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Scenario

 India ranks among the top 10 largest oil-

consuming countries.  Oil accounts for about 30
per cent of India's total energy consumption.
 OPEC stands for 'Organization of Petroleum
Exporting Countries'. It is an organization of
eleven developing countries that are heavily
dependent on oil revenues as their main source of
income. The current Members are Algeria,
Indonesia, Iran, Iraq, Kuwait, Libya.

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Market Influencing Factors

 OPEC output and supply . 

 Terrorism, Weather/storms, War and any other
unforeseen geopolitical factors that causes supply
disruptions. 
 Global demand particularly from emerging nations.
 Dollar fluctuations.
 DOE / API imports and stocks.
 Refinery fires & funds buying.

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Opportunities

1) Supply of crude oil

2) Supply of Gas
3) LNG import and transportation
4) Setting up refineries
5) Marketing petroleum products like LPG
6) Retail marketing of transportation fuel
7) Production sharing contract for oil and gas

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SymbolS Brent crude oil
No of contract a yr 12
Contract Duration 3 months
TRADING
Trading period Monday to Saturday
Trading Unit 100 barrels
Maximum order size 10,000 Barrels

Tick size Mini 1rs

Daily price limit 4%
Price Quote Rs, per barrel
Initial margin 5%
Special Margin Special margin will be imposed on buy-side and sell –side.
Maxi, allowable open Individual-1,50,000 barrel
position
DELIVERY
Delivery unit 50,000 barrel with +/-2 % tolerenace limit
Delivery centre Mumbai
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Tender Day 1 working day after expiry of contract
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CONTRACT LAUNCH CALANDER

CONTRACT LAUNH MONTH EXPIRY MONTH

After approval of commision January 2011

November 2010 February 2011

December 2010 March 2011

January 2011 April 2011

February 2011 May 2011

March 2011 June 2011

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