Page 5 - Policy Economic Report_Mar'25

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

producing factories/ establishments. The IIP growth rate for the month of January 2025 is 5.0 percent
which was 3.2 percent (Quick Estimate) in the month of December 2024. The growth rates of the three
sectors, Mining, Manufacturing and Electricity for the month of January 2025 are 4.4 percent, 5.5
percent, and 2.4 percent respectively.

On external front, India’s foreign exchange reserves saw an increase of USD 305 million, reaching USD
654.271 billion in the week ending March 14, according to the latest data from the Reserve Bank of India
(RBI). Foreign currency assets (FCA)—the largest component of India’s forex reserves—stand at USD
557.186 billion, while gold reserves are valued at USD 74.391 billion. SDRs for the above-mentioned
week increased by $51 million to stand at $18.26 billion. Reserve position in the IMF was up by $283
million to $4.4 billion.

India’s foreign trade position- Exports (Merchandise + Services) for February 2025 stood at $ 71.95
billion, registering a growth of 3.16% YoY growth compared to February 2024. Imports (Merchandise
+Services) for February 2025 amounted to $ 67.52 billion, registering a negative growth of (-11.34) %
YoY increase over February 2024.

As far as oil and gas industry is concerned, benchmark crude oil prices fell in February and early March
as concerns mounted over the outlook for the economy and global oil demand growth amid escalating
trade tensions and as OPEC+ announced it would start unwinding production cuts in April. Against this
backdrop, discussions started on the potential for an initial ceasefire and an eventual peace deal in
Ukraine. ICE Brent futures declined by $11/bbl over the past eight weeks, trading near three-year lows
around $70/bbl.

Hedge funds and other money managers closed a large volume of bullish futures and options positions
in the ICE Brent and NYMEX WTI futures markets, while sharply increasing short positions related to
NYMEX WTI to their highest in more than a year. This fuelled volatility and accelerated a decline in oil
futures prices. Combined futures and options net long positions in ICE Brent and NYMEX WTI dropped to
their lowest level since last December.

Crude spot prices averaged lower in February, reversing previous gains in part, pressured down by heavy
selling in the oil futures market and an easing of the supply risk premium. The decline in prices was more
pronounced in the light sweet Brent benchmark, as a speculator selloff was seen in both ICE Brent and
NYMEX WTI contracts. Spot prices of light sweet crude declined more than futures prices amid a well-
supplied crude market, specifically for prompt loading volumes in the Atlantic Basin.

Natural gas spot prices at the US Henry Hub benchmark averaged $4.19 per million British thermal units
(MMBtu) in February 2025. Henry Hub's natural gas prices rose for a third consecutive month in
February, albeit at a significantly lower rate compared with the previous month. Prices rose by 3.0%, m-
o-m, supported by colder weather across the US and steeper declines in underground storage.
According to data from the US Energy Information Administration (EIA), weekly average underground
storage decreased in February by 27.5%, m-o-m. Henry Hub prices were up by more than 100%, y-o-y,
underscoring above-average seasonal demand.

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