Goldman Sachs Slashes Global Oil Price Outlook For The 3rd Time As Inflation Cools In India

29 July 2023 12:00 PM GMT
On today's episode, financial journalist Govindraj Ethiraj talks to Sydney-based Peter McGuire, CEO of broking and research platform XM Australia or

  • <01:00> Inflation cools in India, GDP numbers are up.
  • <03:49> Oil prices are being marked down elsewhere except at the pump with Peter McGuire
  • <11:18> More Indians are flying even as airfares continue to climb
  • <14:48> Major data leak as CoWIN data goes into public domain
  • <17:22> And hmm..Netflix subscriptions jump after the OTT cracked down on password sharing


NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.

Good morning, it's Tuesday the 13th of June and I'm Govindraj Ethiraj, coming to you from Mumbai India's financial capital.

Our top reports today

Inflation cools in India, GDP numbers are up.
Major data leak as Cowin data goes into public domain
Oil prices are being marked down elsewhere except at the pump
More Indians are flying even as airfares continue to climb
And hmm..Netflix subscriptions jump after the OTT cracked down on password sharing
India's top 5 drugs that you are are taking are…hold on

Inflation Is Down

It was expected, predicted and projected but welcomed in any case.

India's retail inflation has fallen to a 25-month low of 4.25 per cent in May on an annual basis as against 4.70 per cent in April, according to data released by the Government of India's ministry of statistics.

This was the lowest in 18 months.

The consumer food price index (CFPI) or food inflation also fell to 2.91 per cent in May from 3.84 per cent in April. Rural inflation stood at 4.17 per cent while urban inflation stood at 4.27 per cent.

A Reuters poll of 45 economists had predicted inflation to come down to 4.42 per cent in May, down from 4.70 per cent in April. It also stated that the number is set to be the lowest since October 2021.

Bank of Baroda economic research said last evening that the inflation number of 4.3% was lower than their forecast of 4.5% and was mainly driven by food items which was driven by oils and vegetables where inflation fell by 16% and 8.8% respectively.
Given uncertainty on monsoon, the Reserve Bank will be watchful on inflation and it's interest rate policy stance, BOB's team said

Another data point that came out yesterday. The Index of Industrial Production (IIP) rose sharply to 4.2 per cent in April. It was 1.1 per cent in March.

Meanwhile, the Government's Ministry of Finance said India has crossed the $3.75 trillion GDP mark.
Two weeks ago global rating agency Moody's said India had touched $3.5 trillion in GDP.
The jump to $3.75 trillion did not happen in two weeks. Rather the Government is referring to the financial year 2022-23 and Moody's to the calendar year 2022.
The $3.75 trillion GDP figure comes obviously on the back of strong growth at 7.2% for the full year 2022-23.
The current year is likely to see things slowing down a little though.
Moody's, as I mentioned in my podcast yesterday, said the Indian economy is expected to clock a 6-6.3% growth in the June quarter, global rating agency Moody's said on Sunday even as it flagged risks of fiscal slippage arising from weaker-than-expected government revenues in the current fiscal. Moody's growth estimate is lower than the 8% projection for the same or first quarter made by the Reserve Bank last week.

Oil prices

You may not see any difference at the petrol pump and for some time but oil prices and the outlook for the prices are falling in the rest of the world.

They fell again yesterday, ahead of a U.S. Federal Reserve meeting as investors tried to look at the combined impact of rate hikes, prospects of Chinese demand and rising Russian supply.

Significantly, Investment bank Goldman Sachs has slashed it's oil price forecast by almost 10% on it's projections based on more supply and less demand for crude.

A report released by Goldman on Sunday said they were lowering their Brent Crude outlook for December to $86 a barrel, from $95 a barrel.

More significantly, this is Goldman's third downard revision in six months and comes inspite of last week's near shock announcement by Saudi Arabia that it would cut production by another million barrels a day.

Before we take an international look at oil and where it is going, back home, India's energy minister Hardeep Singh Puri said over the weekend that if international crude rates stay stable, Indian oil marketing companies would be able to take a call on reducing petrol and diesel prices.
According to him, the state-run oil marketing companies like Indian Oil and HPCL, BPCL did okay in the last quarter. They have recovered some of their losses and been very good corporate citizens. As we go along we will see what can be done," he said.
Possibly that is the best we can expect from someone in a posoition like his at a time like this.
Meanwhile, in order to divine how oil prices are likely to behave internationally in the next six months and what's driving it down right now, I spoke to Sydney-based Peter McGuire, CEO of broking and research platform XM Australia or and someone who tracks energy prices closely.


Domestic passenger traffic continues to rise, it was up 15% year on year in May 23 last month compared to May 22 and 8%higher than pre-Covid levels, figures just released by rating agency ICRA have said.

Overall domestic air passenger traffic stood at around 13 million in May.

To bring some capacity context in to the picture, GoFirst with some 57 aircraft has not been flying since May 4 and many other aircraft of many other domestic airlines are grounded as well.

Interestingly, international passenger traffic for the full year 2022-23 touched 23 million for Indian carriers, higher than pre Covid levels of 22 million but interestingly lower than the high of 25 million hit in 2019, according to the ICRA note.

Note that this is Indian carriers who carry roughly 45% of outbound traffic.

Passenger load factor, a phrase you would have heard and signifies quite simply how full your aircraft is or was, was around 94%, against 82% in May 2022 and 90% in May 2019, being before Covid.

Translated, you are unlikely to see any vacant middle seats at this point of time particularly on major metro routes so try and book your seats ahead.

Meanwhile, here is some aviation breaking news that you first encountered well, perhaps last year.
India has seen the highest jump in international air fares in the Asia Pacific according to the Airports Council International, a body that represents airports.

ACI Asia Pacific says it looked at 36,000 routes in the top 10 aviation markets in the Asia Pacific and the Middle East and found what it called an alarming increase in international airfares by upto 50% while domestic routes were up by 10%.

The markets that saw the highest fares hike were India at 41%, United Arab Emirates at 34% and Singapore at 30%.

The body, since it represents airports and not airlines points out that several major international airlines recently announced record profits for year 2022 financial year. While airport operators have been reporting negative EBITDA margins for the last 10 consecutive quarters, particularly in China, Japan, Thailand and India, it said.

Speaking of record airline profits and despite flights going full, fares going up and airlines like Indigo doing well, it's co-founder Rakesh Gangwal and Shobha Gangwal are selling their stakes.

Stocks of Indigo fell 3.4% to Rs 2,377 after reports of their decision to sell surfaced and bounced back to close around Rs 2,415. In general, the Indigo stock is hovering around life-time highs.

Their decision to sell is part of a phased exit strategy from the company after Rakesh Gangwal stepped down as director last year following a bitter battle with Rahul Bhatia, co-founder of the airline who now runs it.

As of March end, the Gangwal duo owned around 16% and their family trust owns another 13.5%.

Meanwhile, Indigo also announced that it would fly into the USA on codeshare with Turkish Airlines starting this week or June 15th.

Big Data Leak

A big chunk of data collected from people who went into get their Covid vaccine shots has leaked.
Information of hundreds of thousands of Indians who received the Covid vaccine and was collected on the COWIN portal was leaked on a Telegram channel.

Reports suggested phone number, gender, Aadhaar card or passport no, date of birth were leaked and could be retrieved from a Telegram bot by just entering the person's name.

The story was broken by The Fourth News, a Malayalam news portal.

Media had a field day by revealing - with the most critical parts scratched out of course - names of well known politicians among others with dates of birth.
The Government put out a careful denial last evening saying the Telegram bot was not directly accessing the Cowin database which was safe and protected from any breach.
That may well be the case but most such leaks are not the outcome of direct hacks or someone dialing into a database Mission Impossible style rather someone taking out an entire data dump, physically or virtually and then putting into an interactive platform elsewhere, as seems to be the case with the Telegram bot.
The Government also said the Indian Computer Emergency Response Team (CERT-In) to look into this issue and submit a report.
The ministry report also elaborated on the security measures taken for the CoWIN portal. They said that adequate safeguards for data privacy had been undertaken.
Could the Cowin platform and vaccination effort have been done differently. Unlikely and surely not in India. We have to take a few steps back to how life was in early 2021 as vaccines were rolling out and a vaccination certificate allowed you to enter a venue or take a flight or even enter a country.
Many western countries like the United States went for a simple handwritten card system, driven more by privacy concerns rather than the lack of ability to build a Cowin system, though many did feel the need for one.
Meanwhile, there are many databases now in India, ranging from Aadhaar of course to Cowin and then many smaller ones like passports, PAN Card and even local driving licenses.
This data leak only highlights the need for utmost focus on the integrity and safety of these databases and more importantly, the people who access them.


Netflix subscriptions jump up password sharing
Many OTT fans were utterly dismayed when Netflix said it was cracking down password sharing in many countries.

A report in the Washington Post last evening said the move had now led to a major spike in new subscriptions.
The WashingtonPost quotes an analysis released over the weekend by television analytics company Antenna saying Netflix posted four of its best days of US acquisition with nearly 100,000 daily sign ups on Mary 26 and 27, a few days after the crackdown started and netted 73,000 new daily signs on an average…with the ratio of sign ups to cancellations also increasing.
The password-sharing crackdown began May 23, when Netflix started sending emails to members who were known to be sharing accounts outside their household.
"A Netflix account is for use by one household," according to the email update from the company. "Everyone living in that household can use Netflix wherever they are - at home, on the go, on holiday - and take advantage of new features like Transfer Profile and Manage Access and Devices."
There was angry social media backlash to Netflix's move including by many who threatened to switch to other platforms but it appears that those who backlashed, so to speak, were the piggy backers rather than the original subscribers. All in all, a userful consumer insight, including for other markets like India perhaps. For which we will have to wait and see.
Meanwhile, Netflix's shares rose 2.6 percent Friday.

Well, that's it from me for today, have a great Tuesday and see you tomorrow.

Updated On: 13 Jun 2023 12:30 AM GMT
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