“April is expected to be the bleakest month for the industry, with demand set to plummet by 29 million barrels a day compared with the same month last year,” says International Energy Agency. Due to the coronavirus pandemic situation going on all across the globe demand for oil has decreased drastically from past few months.
US crude oil recorded a price of$10.96 per barrel, which is the lowest price ever recorded. Oil market is currently undergoing a situation called contango. Contango, also sometimes called forwarding, is a situation where the futures price of a commodity is higher than the spot price of the contract today.
“Stepping away from a destructive price war, the return to market management by Saudi Arabia and Russia backed by the United States and a very involved President Trump, marks a physical and psychological inflexion point for the oil market,” says Roger Diwan, vice president, financial services, of IHS Markit.
This situation is an advantage for India. It is the perfect time to invest in the Indian Strategic Petroleum Reserves (ISPR) programme, which would have been very costly earlier. In India, the demand for transport fuel has decreased but a simultaneous increase in demand for domestic fuel is recorded as people stay at home during the lockdown.
“National Policy on Biofuels, 2018 under Para 5.3 inter-alia envisages that during an agriculture crop year when there is projected oversupply of food grains as anticipated by the Ministry of Agriculture & Farmers Welfare, the policy will allow conversion of these surplus quantities of food grains to ethanol, based on the approval of National Biofuel Coordination Committee (NBCC),” says the government.
