Speculative derivative trade impacting oil prices: ONGC

November 9th, 2009 - 7:31 pm ICT by IANS  

New Delhi, Nov 9 (IANS) International oil prices may not stabilise due to a hyperactive derivatives market, which was indulging in speculation to make profits rather than hedging against risk, said the top official of state-run Oil and Natural Gas Corp (ONGC) here Monday.
“I don’t see oil prices stabilising because the way derivatives market is so heated. I don’t think stability at least in forseeable future,” ONGC chairman and managing director R.S. Sharma said.

“Stability may not come unless there are regulations, like those by the G20 to put certain restrictions on the derivatives market and there is a limit on the trade based on the basic natural hedge,” Sharma said.

“The moment derivatives go into the speculative market, I don’t think we will have stability,” he told reporters here on the sidelines of the World Economic Forum’s India Economic Summit.

Sharma also said there was no alternative for the country but to meet energy needs through sources other than those based on fossil fuels.

Hydrocarbons will not be able to meet the future energy needs of the country, which has 16 percent of the global population but has only 0.6 percent of the world’s total known hydrocarbon reserves, he said.

The ONGC official also said his company may also look at sources of nuclear energy in its quest for securing energy supplies for the country.

“I will not rule it out but as on date we have no plans. Definitely we are examining these,” said Sharma.

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