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SUBMITTED BY: MANPREET KAUR GAVESHNA PALAVI SHIVANI GOEL RAHUL RAJ
CRUDE OIL
CRUDE OIL
Crude oil commonly known as petroleum. It is a liquid found with in earth. Composition: Hydrocarbons (50-97%) Organic compounds (N2,O2,S) ( 6-10%) Small amounts of metal (Cu,Ni,Vn,Fe) (<1%)
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2 0 SAUDI ARABIA RUSSIA UNITED STATES IRAN MEXICO
IRAN
MEXICO
IRAN
UNITED STATES
Gulf countries have lowest production cost i.e. USD 4-5 per barrel as compare to the north sea and brazil where production cost is about USD 9-13 per barrel Top 5 oil exporting countries
IRAN
UAE
12
10
8
6 4 2 0 UNITED STATES JAPAN CHINA GERMANY SOUTH KOREA
CHINA
GERMANY SOUTH KOREA
Indias oil import bill in the 11 months of 2010- 2011 was USD 85 billion and reported to reach 90 billion USD. India imports nearly 80% of its crude oil requirement, spent 79.95billion USD in 2009-2010. The recent strengthen of crude oil prices could impact economic growth momentum in the country.
The main factors that would be responsible for economic growth moderation in 2011-12 would be crude oil(CO) prices & RBIs tightening of monetary policy in response to oil prices. Rising crude prices will lead higher inflation & higher inflation attracts monetary tightening.
Rising oil prices could threaten the European economy which are net importers of oil & gas, havent recovered fully from financial crisis & face heavy debt loads.
Rising oil prices would push up inflation in Europe, where it already exceeds official targets.
GOLD
Gold is a dense, soft, shiny, malleable and ductile metal.
Gold has been a valuable and highly precious metal for coinage, jewelry & other arts since long before.
Gold standards have been the most common basis for monetary policies throughout the human history.
The world consumption of the new gold produced is: Jewelry -50% Investment -40% Industry -10%
Mumbai
Delhi
26590.00
26980.00
Calcutta
27040.00
2) Investors buy gold to protect themselves from currency debasement. We can interpret the rise in gold prices mean that investors expect future inflation to be high. Rising gold prices mean that investors are fearful about economic aspect & about excess inflation.
After the March 2008 spike, gold prices declined to a low of US$712.30 per ounce in November.
Pricing soon resumed on upward momentum by temporarily breaking the US$1000 barrier again in late February 2009 but regressed moderately later in the quarter.
Later in 2009, the March 2008 intra-day spot price record of US$1,033.90 was broken several times in October, as the price of gold entered parabolic stages of successively new highs when a spike to $1226 of the price to the midOctober levels.
On August 22, 2011 gold reached a new record high of $1908.00 at the London Gold Fixing.
Economic growth is fairly strong in India as compare to rest of the world. It is growing at a slower rate but still above 7%. So India doesnt face the same debt problem that western country faced. RBI has been raising interest rate & tightening monetary policy. So to reduce inflation RBI is reducing the rupee in circulation.
DOLLARS
ABOUT DOLLAR
United States dollar sign: $; code: USD; also abbreviated US$), also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies
is used as the standard unit of currency in international markets for commodities such as gold and petroleum.
is the currency most used in international transactions is one of the world's reserve currencies( is a currency that is held in significant quantities by many governments and institutions as part of their foreign exchange reserves).
1) BALANCE OF TRADE Also known as current account balance. The balance of trait represents the difference between exports & imports in terms of goods & services. If exports exceed import in either current account, it is called surplus. If imports exceed export then it is called deficit.
The US has been running a trade deficit with the rest of world in recent times. This makes the foreign investors increasingly nervous & can affect the dollar significantly.
2) FALLING PRICES ON FOREIGN GOODS When the prices for foreign goods decreased they become more attractive for American consumer & create a trade deficit. When there is rise in price of foreign goods because of increase in demand can make the American goods more attractive & narrow the trade deficit. This increases the value of dollar.
3) BALANCE OF INVESTMENT When the US imports more then it exports so investors from other countries have to buy US assets to keep the dollar from falling. 4) BUDGET DEFICIT & NATIONAL DEBT- The US Govt budget can affect the dollar value. 5) LITTLE OR NO DEFAULT ON DEBT- When the Govt keeps a good credit history, risk goes down & the dollar goes up.
6) PRESIDENT POPULARITY Popularity of the US president id tied to value of US dollars. 7) TERRORIST ATTACK & WAR- Attacks damage consumer & business confidence hampers the economic growth.
8) CONSISTANT POLICIES- If investor feel that things will remain same they will flop to dollar because it is safe. This increases the demand thus increases the value of dollar.
9) GOVERNMENT EXPANSION- New departments & increase govt functions cost money. Like other govt expenses expanding new groups like TSA & department of homeland security can lower the dollar value due to their opportunity cost against other expenses in the budget.
QUE - If there is RISE OR FALL in US dollar then what will happen to GOLD PRICE RISE OR FALL??? ANS - If the US dollar falls, Gold will remain the same for the rest of the world. But, for the U.S., we will end up paying more for the same amount of gold QUE - If there is RISE OR FALL in US dollar then what will happen to CRUDE OIL PRICE RISE OR FALL ???? ANS If the US dollar falls, Oil prices will rise for the U.S., but oddly, it will fall for other countries. This is because crude oil is primarily traded in U.S. dollars
QUE-. if there is RISE OR FALL in CRUDE OIL PRICE then what will happen to GOLD PRICE RISE OR FALL??? ANS- Since oil is used in the process of excavating and refining the gold, if oil prices go up, so does gold prices
CONCLUSION
GOLD AND CRUDE OIL HAVE POSITIVE RELATIONSHIP US DOLLAR AND GOLD HAVE NEGATIVE RELATIONSHIP US DOLLAR AND CRUDE OIL HAVE NEGATIVE RELATIONSHIP
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