R.

LAKSHMI ANVITHA (1226213102) GREEN TECHNOLOGIES SUPPLY AND DEMAND ANALYSIS

SUMMARY: Oil, also known as petroleum, is the most actively traded commodity in the world. The price is usually quoted per barrel. Oil trading is transacted on changes in the price of crude oil and does not involve a physical purchase of the commodity. The direction of the price movement determines whether a trader will profit or not. The two kinds of contracts that are traded are oil futures and options. The price of oil can be significantly affected by political factors, as well as environmental factors such as natural disasters. Other influencing factors include demand such as that driven by modernizing populations in India and China, as well as supply - that is, production rates in oil producing countries. In addition, technological advances in alternative energies may also affect the price of oil. In short, oil trading can involve significant price fluctuations making it an exciting and potentially profitable market. Oil prices also affect currency trading. Sometimes, a weakened US dollar may cause a rise in the price of oil. Other currencies that rely on commodity prices, such as CAD can also be affected by changes in oil prices. In this report we are analyzing the demand and supply , price factors of crude oil. INTRODUCTION: Until as recently as the early 1970s, the main channel for oil supply was the integrated system of the major oil companies. Each company had its own source of crude oil supply as well as the capacity to refine it. Petroleum products outside this closed system, either released from it due to imbalances between refinery output and market demand, or refined independently of it, constituted the basis for spot trading. The volume of spot trading was limited to around5 % of the total oil trade, while the remaining 95% was based on contracts specifying prices and quantities over relatively long periods of time. Even that limited amount of spot trading was conducted in a very simple manner. Most of the trade was in the form of un invoiced exchanges and based on personal trust, characterizing An era that

many oil company executives remember as the "good old days. Today, spot and spot-related Trades comprises ome8 0% to 85% of the internationally traded petroleum. Petroleum trading not only has developed into one of the largest worldwide commodity markets but has turned into an increasingly Complex business.

GLOBAL OIL MARKET DISRUPTIONS: While Brent crude oil spot prices have increased as much as $7 per barrel (6%) since the chemical weapons incident in Syria on August 21, 2013, market fundamentals had been moving Brent prices higher even earlier. From mid-April to August 20, Brent crude oil spot prices increased almost $15 per barrel (15%) because of increasing global refinery demand coupled with record levels of unexpected crude oil production outages, notably in Iraq and Libya. Global unplanned crude oil and liquid fuels disruptions averaged 2.7 million barrels per day (bbl/d) in August, the highest level over the period January 2011 through August 2013. Oil supply disruptions in key producing countries are up sharply:

Libya. Protests at many seaport facilities have blocked exports, and, as a result, crude oil supply disruptions averaged close to 1 million bbl/d in August, up from 0.13 million bbl/d in April. Pipeline closures by militia groups at the end of August have worsened the situation, with disruptions rising to 1.35-1.4 million bbl/d by the end of August.

Nigeria. Disruptions in June on key pipelines helped curtail almost 450,000 bbl/d of production, up 100,000 bbl/d compared to May. Production recovered somewhat by August when 290,000 bbl/d were off-line.

Iraq. Persistent attacks on the pipeline from Kirkuk to Ceyhan in Turkey helped push disruptions of Iraqi crude oil production to 250,000 bbl/d in August, up 100,000 bbl/d from April.

DEMAND Global oil product demand is projected to increase from 89.0 mb/d in 2011 to 95.7 mb/d in 2017 (a compound average growth rate of 1.2% or 1.1 mb/d per year). This outlook is based on an average annual expansion in global economic activity of 3.9% and assumes that oil intensity declines by around 2.5% per year. Asia and the Middle East account for the bulk of the projected

growth in demand (0.6 mb/d or 2.1% per year and 0.3 mb/d or 3.4% per year, respectively), followed by the former Soviet Union (0.1 mb/d or 2.9%) and Africa (0.1 mb/d or 3.0%). Overall, our assessments and projections of global demand have been trimmed by 0.6 mb/d on average for 2011-2016 since our December 2011 update, due mostly to reduced baseline data and a weaker macroeconomic backdrop. Oil demand in the emerging and newly industrialised economies of the non-OECD breaks through 50 mb/d by 2017, rising by an average of 1.3 mb/d (or 2.9%) per annum over the six year period. In contrast, OECD demand declines by an average of 0.2 mb/d (or -0.4%) per annum, to 45.4 mb/d in 2017. The predicted OECD fall reflects a combination of continued efficiency gains, changes in consumer behaviour, market saturation and fuel switching. Total non-OECD demand is forecast to overtake its OECD counterpart in 2014. As non-OECD countries become wealthier, potential demand growth becomes more restrained, as the structural developments that are causing absolute contractions in OECD demand increasingly impact the non-OECD. Diesel/gasoil will be the primary driver of global oil use, accounting for 40% of total demand growth and 30% of absolute demand. Gasoil has increasingly dominated demand growth in recent years, given its multiple uses and drivers. Consumption globally is projected to rise to 28.8 mb/d by 2017, an average annual gain of 0.5 mb/d (or 1.7%) over the six-year forecast from 26.1 mb/d in 2011. Gasoil growth is concentrated in non-OECD Asia (roughly 56% of total global growth), particularly China. Demand in China is forecast to rise by 3.6% per annum, through the outlook, to 3.9 mb/d by 2017. The health of the global economy poses a central risk to this outlook, given sluggish OECD economic expansion, persistent debt issues in the OECD and signs of a slowdown in China.

SUPPLY: The supply forecast has become more robust. Global production capacity is expected to increase by an aggregate 9.3 mb/d over the period to 102 mb/d in 2017, or 1.5 mb/d per year. Around 20% of liquids growth comes from Iraqi capacity and 40% comes from North American oil sands or light tight oil production. Natural gas liquids (NGL) supply grows by 2.4 mb/d from to 14.5 mb/d in 2017, of which non-OPEC NGLs (centred in the US) contribute around 60%.

OPEC crude oil production capacity is forecast to rise by a steep 3.34 mb/d over the 2011-2017 period, to 37.54 mb/d, with Iraq providing just over 50% of the increase. By contrast, sanctions hit Iran sees production capacity decline by more than 30% by 2017 compared to 2011 levels. This relatively higher capacity headline figure is skewed, however, by the temporary drop in OPEC capacity to a four-year low during the 2011 Libyan civil war. Recovering Libyan production provides a near 40% increase in our forecast and if removed from the calculations shows OPEC will raise capacity by a smaller 2.08 mb/d, in line with growth rates of previous years. Non-OPEC supply is expected to increase by 4.8 mb/d from 2011 to 2017, or at an annual average of 790 kb/d (9%). Remarkably, roughly 80% of the growth comes from North American light tight oil and Canadian oil sands production, offsetting mature field decline elsewhere. This growth reflects the formidable power of the technological advances applied to developing unconventional resources a technological revolution akin to the onset of 3-D seismic

exploration and development in the 1980s. So far these technologies have been focused on the North American oil patch, reflecting not only the regions large non-conventional resources but also its favourable investment conditions. While there is a strong potential for the same transformative technologies to lift unconventional production elsewhere, that is not expected to bear fruit until after the forecast period. For the next five years, there will thus be a striking regional imbalance in the allocation of nonOPEC supply growth, with the Americas accounting for the vast majority of the increment. In addition to the US and Canada, the Brazilian subsalt and Colombia are expected to contribute. OPEC member Venezuela may also see marginal growth in unconventional output, though the country is not expected to overcome its above-ground challenges in the forecast period, even in the event of a shift in political power. High oil prices drove capital spending up by around 8% in 2012, but they have also led to increased demand for labour and oilfield service equipment. Finding and development costs (and cost inflation) are slightly lower now than in 2011 (especially in the US). Lower crude prices would translate into lower drilling activity and production rates in the medium term, and therefore represent a downside risk to the forecast. While the broad uptake of horizontal technologies to tap tight oil deposits outside of the US could increase oil supplies, geopolitical unrest could also threaten oil production and transport, especially in the Middle East and Africa

CONCLUSION: In the above analysis , it is clear that there is a rapid increase for demand of crude oil across world. In India it is increasing at a rate of 4.56% per annum. It is to be noted that India is after china in the race. For the next five years, there will thus be a striking regional imbalance in the allocation of non-OPEC supply growth, with the Americas accounting for the vast majority of the increment. The health of the global economy poses a central risk to this outlook, given sluggish OECD economic expansion, persistent debt issues in the OECD and signs of a slowdown in China.

The Green Party's work in 2013 has delivered positive and significant results on the issues that matter to New Zealand.

Government backing of City Rail Link

The Government made a huge backtrack on their opposition to the city rail link in Auckland. After five years of campaigning by the Green Party, the Government have seen the light and agreed to build the rail link. It is a smart green transport solution and we were at the forefront of it.

Oil and gas waste free milk

After the Green Party highlighted on Campbell Live the issue of toxic waste from oil and gas exploration being spread on farms in Taranaki, Fonterra made a promise not to collect milkfrom any new dairy farms that have this waste spread on them.

Improvements to the Food Bill

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Opening up of Government banking contract

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Cleaning up toxic sites

In May, Green Party mining spokesperson Catherine Delahunty and Environment Minister Amy Adams attended the closing ceremony at Tui Mine to mark the successful conclusion of the mine clean-up project. The Tui Mine clean-up was part of the toxic site management work conducted under the Memorandum of Understanding between the Green Party and the National Party. Another success of our work with Government has been the ongoing development of a national register of contaminated sites.

Warmer drier homes

Our Memorandum of Understanding with National has also meant that over 150,000 New Zealand homes have had insulation installed as part of the Warm Up New Zealand scheme. Researchers found $1.21 billion worth of health benefits from the scheme.

Truth in banana labelling

We were part of the successful call to peel the "ethical choice" labels off Dole bananas after Oxfam released a report detailing just how unethical they were.

Minimising animal testing

We brought to light the issue of animal testing as part of the Psychoactive Substances Bill and have succeeded in forcing the Government to include provisions in the Bill, which while not going as far as we want, will at least restrict animal testing.

Helping New Zealanders to keep our assets

The Green Party was an active part of the Keep Our Assets coalition which collected over 440,000 signatures and delivered them to the Clerk of Parliament in July.

Winning marriage equality

We worked with the many groups to achieve Marriage Equality in New Zealand. As the only party to have marriage equality as policy, we were able to vote all together for it and support MPs from other parties to vote for it as well.

Strengthening International Criminal Court

Kennedy Graham succeeded in passing a motion about New Zealand ratification of the Kampala Amendments to the Rome Statute which will strengthen the International Criminal Court. This was the Government's first public acknowledgement that they will be seeking to ratify the amendments.

Growing New Zealand's cycle trail

There have been thousands of more kilometres of dedicated cycle paths, off-road cycling tracks and on-road cycling routes opened or approved under the Memorandum of Understanding we have with the Government.

Pressure to achieve better health and safety regulations

The changes in the law to provide for a new stand-alone Occupational Health and Safety agency and much tougher regulation of mining have occurred because of the pressure we put on the Government over the Pike River disaster.

Improving ACC
We have been keeping the pressure on the Government to fix ACC. Significant improvements are being made to its culture and the way it treats people. For example, it is now much more likely that specialist medical assessments will be genuinely independent, and claimants are being given a choice over who conducts them.

REFERENCES:
1)IEA (2013) Oil medium term market report, 14th may 2013

http://www.iea.org/newsroomandevents/speeches/SlidePresentationMTOMRLaunch.pdf 2) FOREXYARD Crude oil trading, 2013 http://www.forexyard.com/en/trading/crudeoil 3) EIA(2013) The Availability and Price of Petroleum and Petroleum Products Produced in Countries Other Than Iran ,29th August 2013 http://www.eia.gov/analysis/requests/ndaa/?src=Analysis-f2 4)OPEC Monthly Oil Market Report October 2013 http://www.opec.org/opec_web/static_files_project/media/downloads/publications/MOMR_Octob er_2013.pdf

5) EIA (2013), "Global crude oil supply disruptions and strong demand support high oil prices", Today in Energy, US Energy Information Administration, September 10 http://www.eia.gov/todayinenergy/detail.cfm?id=12891