11/08/2016

Message from the Chief Executive Officer

In the crude oil, we trade all oil types of crude oil (such as light, heavy, sweet and sour). Light oil has a low-density viscosity, while heavy oil is of higher density. Sweet oil has less sulfur, and sour oil has excessive sulfur. The world market prefers light, sweet crude oil, largely because it requires less refinement and production time before going to market. Commodities are traded based on margin, and the margin changes based on market volatility and the current face value of the contract. Generally, the trading margin is approx. between 8% and 12% of the traded value. The trading market on mineral fuels, oils, distillation products, etc. in 2015 has been equivalent to US Dollars 2,190,000,000,000. The margin amount may change in different market conditions, but it is evident that the current advantages provided by the markets make it attractive for investors, who are looking for opportunities, to build up exposure to oil prices.

Money under management more than doubled between 2014 and 2015 to nearly $380 billion. The price is influenced by the following principal factors: For the past 50 years, the price of crude oil has been denominated in U.S. dollars. With the fluctuations of the value of the U.S. dollar and the prominence that newer currencies such as the Euro are gaining, OPEC is considering switching crude oil from a U.S. dollar quotation system either to the Euro or to a basket of multiple currencies. This could have an effect on oil prices.

Alternative methods of oil development are gaining prominence. Oil shale and tar sands have become viable oil producing sources. As the price of technology begins to decrease, these sources become more accessible to refiners. Methods for turning methane and coal into oil substitutes are being explored again. All of these alternatives have the opportunity to upset crude oil prices. Global warming is considered an unintended consequence of using petroleum-based products. This has led to an aggressive move to develop green energy sources such as fuel cells, ethanol, liquid natural gas and others, in the hope that they can potentially reduce the world's reliance on crude oil. As these technologies become more common in the market place, they have the ability to displace crude oil. We are active in both the physical and financial markets worldwide for crude oil and oil-refined products, power and gas, and have extensive capabilities in the emissions markets. Therefore, we can

also provide our clients with hedging services that result in price certainty and capital relief. Our hedging products include fixed price, index-based pricing and other options structures.

We obtain oil from all the major production areas in the world, including Africa, the Middle East, the Far East, Russia and South America, and sell to refining companies globally. We act as physical trader, therefore we usually act as a buy & sell trading company. We can also act as intermediary and/or distributor. In all cases, we supply our clients by moving products around the world. Most of the world’s oil we trade is produced in Russia and the Middle East, whilst most of our End Buyers are in Asia.

 

Niek Tersteeg

Chief Executive Officer
Gemini Group of Companies