Crude has jumped to $100 a barrel from $75 in October amid signs the US economy will likely avoid a recession. Most economists expect global economic growth to slow next year as Europe’s debt crisis threatens to drag the continent into recession.

Birol suggested crude producers should boost output amid growing demand in developing countries and falling inventories in wealthy nations. The Organisation of Petroleum Exporting Countries is meeting later today in Vienna to decide whether to change the cartel’s output quotas.

“I’m sure OPEC knows much better than me what to do,” Birol said when asked if OPEC should raise output. “But seeing that oil prices are still high today and the negative effect that has on the recovery of the global economy, I hope the energy producing countries will take these things into account and make their decision accordingly.”

Birol said crude prices could rise to $150 by 2015 if oil-producing countries in the Middle East and North Africa don’t invest $100 billion a year to maintain existing fields and develop new ones.
Agencies

Commodities plunged across the board on Wednesday, on renewed fears Europe’s debt crisis would drag on. Crude was also weighed down by the absence of action from Wednesday’s meeting of the Organization of Petroleum Exporting Countries to quickly trim production in case oil demand grows slower than expected.

Brent crude gained $1.02 a barrel to $106.04 by 0439 GMT (0909 IST), after settling $4.48 a barrel lower on Wednesday and posting the biggest one-day percentage loss since September 22. US crude was 59 cents higher at $95.54 a barrel, after settling $5.19 lower on Wednesday, also the benchmark’s biggest one-day percentage loss since September 22.

“We are going to see WTI trade in the $95 to $102 a barrel range weighed between the ongoing economic uncertainty and supply concerns,” said Jonathan Barratt, managing director at Commodity Broking Services in Sydney. “Optimism comes after every speech in Europe, but there are clouds still.”

Asian shares and base metals fell, while the euro nursed losses after plumbing its lowest in 11 months following a surge in Italy’s borrowing costs. The market view that last week’s European Union summit had failed to produce a solution to the crisis was reinforced when Italy had to pay a stinging 6.47% on 5-year bonds on Wednesday, a record borrowing cost for the euro era.

“There is still a lot of uncertainty surrounding Europe and that is worrying investors,” said Ken Hasegawa, commodity derivatives manager at Newedge Brokerage in Tokyo. “Although there was an agreement, a lot of countries are involved and they need to get the deal cleared,” he said, referring to last week’s European summit.

On Wednesday, Brent broke below its 300-day moving average of $107.08 and hit a session low of $104.36, the lowest for front-month Brent since October 6. US crude also dropped below the 200-day moving average of $95.98.

Markets also shrugged off data from the Energy Information Administration showing a 1.9-million-barrel drop in US crude stockpiles last week. “A lot of technical levels, like the 200-day moving average, were crossed and that triggered stop-loss selling leading to such a big fall overnight,” Hasegawa said.

Still, gains may be capped after data showed China’s factory output shrank again in December following a fall in new orders, entrenching expectations that manufacturers are struggling with waning global demand and tight domestic credit conditions.

The HSBC flash manufacturing purchasing managers’ index, the earliest indicator of China’s industrial activity, stood at 49 in December, a modest rise from November’s 47.7, but pointing to a monthly contraction in activity nonetheless.

Opec oil producers agreed to an output target of 30 million barrels per day, ratifying current production near 3-year highs, in a deal that settles a 6-month-old argument over supply policy firmly in Saudi Arabia’s favour.

But Opec did not discuss individual nations’ quotas, and there was no mechanism in place to cut quotas should already-fragile demand grow less quickly than expected. With output from Libya recovering after months of civil war, a lack of a cutback plan may risk increasing boosting supplies amid slowing demand.

“With Opec agreeing to set a new output target at 30 million barrels per day, broadly in line with the Secretariat’s call on Opec crude for next year, some adjustments to current production allocation between member states will have to be made,” analysts at Barclays said in a note.
Agencies

According to the OMCs, the hike could be in the range of 50 paise to Re 1, however, no concrete figure could be ascertained at the moment. The depreciating rupee has added Rs 50,000 crore to the fuel subsidy bill until now, the report suggests.

Among the individual stocks, Bharat Petroleum rallied 3% to Rs 530, Hindustan Petroleum rose 2.5% at Rs 284 and Indian Oil was up 2% at Rs 273 on the Bombay Stock Exchange.
Business Standard

The LNG import and regassificiation facility at Dhamra port will be besides the Rs 4,320 crore terminal IOC is planning to set up at Ennore in Tamil Nadu, the firm’s Director (Business Development), A M K Sinha, said.

“We are looking at the possibility of setting up a LNG import facility at Dhamra port to meet gas demand in Orissa and West Bengal. Our refineries at Paradip (in Orissa) and Haldia (in West Bengal) alone need 2.5 million tons of LNG,” he said.

Situated between Haldia and Paradip, the port at Dhamra will be one of the deepest ports of India with a depth of 18 meters, which can accommodate super cape-size vessels up to 180,000 DWT. Dhamra Port Co Ltd, a 50:50 joint venture of L&T and Tata Steel, has been awarded a concession by Government of Orissa to build and operate the port.

Sinha said IOC has begun work on the proposed LNG import facility at Ennore. “We have awarded the contract for front-end engineering and design (FEED) study Foster Wheeler.” IOC had in 2007 put on hold the 2.5 million tonnes a year LNG import-cum-regassification terminal after huge gas finds off the east coast made the project economically unviable.

But the output from Krishna Godavari basin fields falling short of the target, LNG imports are being talked as an alternative to meet the demand. IOC and its subsidiary Chennai Petroleum Corp Ltd (CPCL) would be the lead promoters of the Ennore project.

Interestingly, Petronet LNG Ltd, the nation’s largest liquefied natural gas importer, too is looking at setting up a LNG import terminal on the east. Petronet, which is expanding its currently operational Dahej terminal in Gujarat to 15 million tons from 10 million and is setting up a 5 million tons facility at Kochi in Kerala by 2013, is looking at sites in Oriss and Andhara Pradesh for its third terminal.

IOC is an equal promoter of Petronet along with GAIL India, Oil and Natural Gas Corp and Bharat Petroleum Corp. Sinha said like Dhamra, Ennore too would have captive users in its refinery at Chennai. “We have an advantage as we have our own captive gas requirement to be met.”
Agencies

The Organisation of the Petroleum Exporting Countries agreed a new supply target of 30 million barrels per day (bpd), Venezuelan Oil Minister Rafael Ramirez said, roughly in line with current production.The agreement caps output for all 12 Opec members for the first half of the year, keeping supply near 3-year highs — enough to rebuild lean global inventories.

Higher supply from Opec has kept a leash on oil prices which traded at $108 for Brent on Wednesday, down from a year-high $127 in April. When Opec met in June it failed to reach an agreement on a higher supplies, leaving Saudi Arabia free to open the taps to compensate for lost Libyan supply.

Riyadh says it pumped 10 million barrels a day last month, its highest in decades. Price hawks Iran, Venezuela and Algeria, all of whom already pump at full capacity, want to keep oil prices above $100 a barrel. Brent crude traded at just over $109 on Wednesday.

“We think the present level is appropriate for producers and consumers,” Algerian Oil Minister Youcef Yousfi said of oil prices.

LIBYAN OUTPUT WON’T GUIDE SAUDI POLICY

The hawks sought a commitment from Saudi and its fellow Gulf Arab producers Kuwait and the United Arab Emirates to make room for the restoration of Libya’s supply so that collective production does not balloon over the course of 2012.

But going into the meeting Saudi Arabia did not consent to that.

“If Libya increases it doesn’t necessarily mean Saudi will cut,” said Saudi Oil Minister Ali al-Naimi.

“We don’t react to that, we react to market demand,” he said.

Saudi and other Gulf producers would prefer lower prices to help nurture global economic growth. The UAE said recently that $80-$100 was preferable.

“Saudi Arabia is the central banker of the oil market and the decision that they will bring more oil to the market is definitely a good one,” said Fatih Birol, chief economist at consumer body the International Energy Agency.

With Libyan supplies post-civil war rising more quickly than expected, world oil inventories should increase if Opec maintains output near current levels.

Opec’s secretariat calculates that 30 million barrels a day from Opec will meet demand in the first half of the year and build stocks by 650,000 bpd.

According to the U.S. Energy Information Administration that would lift inventories among industrialised OECD nations from 56 days of OECD demand now to 60 days by the middle of 2012.
Agencies

Brent and US crude prices shot up at 9:45 am (1445 GMT), adding to previous gains, as volumes surged in one of the most concentrated bursts of trading activity in months. Other commodity markets did not jump, and traders remained unable to pinpoint a specific trigger for the price surge.

Oil prices, and US gasoline futures especially, also received a boost from news of a collision shutting the Houston Ship Channel. Any talk of a big policy change from the US Federal Reserve was squelched after the Fed ended a one-day meeting holding policy steady, causing oil initially to pare gains and turning equities on Wall Street lower.

“I don’t know why markets are reacting negatively since there was no indication of QE3 (quantitative easing) ahead of the meeting, despite rumors running around today,” said Dominick Chirichella, senior partner at Energy Management Institute in New York. “I think oil is focused more on Iran and this possibility of a blockage of the Strait of Hormuz,” Chirichella added.

Brent January crude rose $2.24 to settle at $109.50 a barrel, after reaching $111.10 intraday. Brent’s 2.09% gain was the biggest one-day percentage rise since November 28. US crude rose $2.37 to settle at $100.14 a barrel, after reaching $101.25. The 2.42% jump was the biggest since November 16.

Trading volume eased after the early surge, but US crude turnover was 24% above the 30-day average and Brent volume was 1% below the 30-day average, according to Reuters data.

Several traders pinned oil’s early surge on rising tensions in Opec member Iran a day after a news redistribution service appeared to have drawn market attention to comments made on Monday by a member of the Iranian parliament who said the military was set to practice shutting the Strait of Hormuz, the world’s most important oil shipping route.

Market participants also cited talk the US Fed could be mulling a third round of quantitative easing. The Fed in its statement pointed to Europe’s turmoil as a big risk to the US economy and left the door open to a further easing of monetary policy even as the central bank noted some improvement in the US labor market.

Adding to supply concerns and lifting US gasoline futures, the Houston Ship Channel, an important oil transport waterway to the region’s refining network, shut following a collision between a tanker and a cargo vessel.

During post-settlement trading, news of bombs hitting an Iraqi crude pipeline transporting crude from southern oilfields to storage tanks around the Basra oil hub added another supportive factor for oil prices.

Ahead of the early price spike, oil prices received a boost when investors took some encouragement from lower yields at an auction of Spanish short-term debt and a survey showing German investor sentiment rose unexpectedly in December.

Investors also eyed comments by Opec ministers gathering in Vienna ahead of Wednesday’s policy meeting. The group’s oil price hawks looked set to accept a new production target that legitimizes the big increase in supply over the last six months out of rival producers Saudi Arabia and the its Gulf allies. The deal is designed to help restore Opec’s credibility after talks fell apart in June and left it without its normal self-imposed output constraints.

Opec, as well as the International Energy Agency, said high production levels by the producer group will help balance oil markets next year as demand growth slows.
Agencies

The company is hoping to get about Rs 16,000 crore in compensation from the government by early next month to make up for part of the losses it incurred on selling the three fuel in the first half of current fiscal.

Parliament today approved additional spending by the government, including payment of Rs 30,000 crore to state fuel retailers as subsidy. IOC, the market leader, would get about Rs 16,000 crore out of that. Cash subsidy from the government “will give us some respite for next couple of months”, he said.

While crude oil ruling at over USD 100 per barrel and rupee depreciating to its all time low of Rs 53.29 to a US dollar has made oil imports costlier, the government has not allowed oil firms to adjust retail fuel prices in line with the cost. Butola said IOC is estimated to lose Rs 73,605 crore in fully 2011-12 fiscal.

“This should be seen in comparison to the under-recovery (revenue loss) of 2010-11. Last year, the industry (IOC and Bharat Petroleum and Hindustan Petroleum) together had an under-recovery of Rs 78,190 crore while this year IOC alone has an under-recovery of over Rs 73,000 crore,” he said.

Fuel retailers currently sell diesel at a loss of Rs 13.53 per litre, kerosene at Rs 29.99 per litre and domestic LPG at a discount of Rs 287 per 14.2-kg cylinder. The three firms together are projected to lose Rs 137,605 crore in 2011-12 fiscal.

IOC alone is losing Rs 227 crore per day on sale of diesel, domestic LPG and kerosene and had to borrow heavily to meet working capital requirement.
Agencies

New York’s main contract, light sweet crude for delivery in January, was up eight cents to $97.85 a barrel. Brent North Sea crude for January delivery shed six cents to $107.20.

An EU deal last week on closer economic coordination between member states failed to reassure traders that an end to the euro zone crisis was in sight, Phillip Futures said in a report.

“A European summit agreement last week to strengthen budget discipline in the euro zone failed to restore financial market confidence,” it stated.

“Crude oil prices… (were) pressured by concerns that Europe’s agreement on closer fiscal union will not solve its debt crisis and might deepen a regional slowdown,” the report added.

Markets were watching for tomorrow’s output meeting of the Organisation of the Petroleum Exporting Countries (Opec), the cartel which pumps about one-third of the world’s oil, for indications on its production goals.

Opec production hit its highest level in three years in November — 27.94 million barrel a day — 800,000 barrels higher than the previous month, according to the Middle East (West Asia) Economic Survey.
Agencies

The board meeting held today was attended by four representatives of TCG led by Purnendu Chatterjee, three West Bengal government nominees, independent director Jamshyd Godrej, managing director Partha Bhattacharya and five nominees of the lenders.

The spokesman said that the board had also approved raising of resources to the extent of Rs 200 crore for implementation of Butane-I extraction plant which would result in an increased profitability of Rs 80 crore annually.

The board also expressed the need to focus on the issue to raise capacity utilisation from 88% at present to 100%, the spokesman said.
Agencies

This year’s list of the country’s 500 largest corporations, compiled by the global business magazine Fortune’s Indian edition, features as many as 57 new entities.

All the 500 firms together recorded a collective turnover of Rs 45,79,911.38 crore in the latest financial year. IOC was the biggest with annual revenue of Rs 3,23,113.12 crore, followed by RIL with a full-year revenue of Rs 2,72,923.36 crore.

Both IOC and RIL have retained their top-two ranks from the previous year, Fortune India said. In this year’s list, the two are followed by Bharat Petroleum (Rs 1,56,580.12 crore) at the third and State Bank of India (Rs 1,47,843.92 crore) at the fourth place. Other entities in the list are Hindustan Petroleum (5th rank), Tata Motors (6), Oil & Natural Gas Corp (7), Tata Steel (8), Hindalco Industries (9) and Coal India (10).

There are as many as six state-run companies in the top-ten positions, as against four from the private sector. The magazine said that the total sales of the country’s 500 top corporations have grown by 21.5% from the last year, while their median growth has been even higher at about 25%.

“The good news, however, is that many of the Fortune India 500 companies are now beginning to shape the world’s opinion of India for the better. And they may just be doing a better job than their Chinese counterparts,” it added.
Agencies