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Monday, 02 December 19
OPEC PREPS FOR OIL'S 2020 BALANCING ACT - WOOD MACKENZIE
 What steps should OPEC and its non-OPEC partners take to keep the market in balance in 2020? Ahead of OPEC’s meeting in Vienna on 5 and 6 December, I turned to Ann-Louise Hittle, Vice President Macro Oils, for answers.
What does good look like for OPEC in 2020? Given the uncertainty around global supply growth, demand and geopolitics, OPEC will do well to get an outcome like 2019. Brent will average U.S.$64 per barrel in 2019, down on last year’s U.S.$71, but still the second-highest annual price since 2014. It’s a measure of OPEC’s success so far in balancing what is a fundamentally an oversupplied market.
Will demand recover in 2020? We think so. This year has disappointed because of a series of one-off factors and the slowing global economy. The 0.6 million barrels per day (b/d) outcome will be well down on the 1.1 million b/d we forecast back in January 2019.
Sanctions-related demand destruction in Venezuela and Iran, plus warm weather in Europe shouldn’t feature next year. We think annual growth will double in 2020 to 1.4 million b/d. China will be key – we expect growth there to double to 0.6 million b/d, buoyed by strong demand for marine gasoil, as bunker volumes move in response to the new low-sulphur IMO regulations on shipping fuels.
Is global supply still growing rapidly? Yes, we expect an increase of 1.8 million b/d in 2020 –assuming OPEC+ maintains its current production cuts.
What’s changing is the mix, and for the first time in years, the U.S. Lower 48 won’t dominate as much. U.S. is about half the 2020 growth, with the rest coming from other non-OPEC producers including Guyana, Brazil and Norway. The giant Norwegian field, Johan Sverdrup, on stream since October, will add 0.3 million b/d in 2020.
So, U.S. tight oil is still growing? Yes, but at a much slower rate. We expect an increase of 0.5 million b/d, well below the 2018 annual peak of 1.5 million b/d. The rig count is down by 18%, or almost 200 rigs from the November 2018 high, across all tight oil plays. Monthly production growth year-on-year peaked at 1.8 million b/d in August 2018 and could slip to just 0.4 million b/d by end 2020.
Did we anticipate that? We expected 2018 to be the peak year of U.S. tight oil growth – but not the rate of slowdown we’re seeing unfold. Investors are forcing U.S. independents, which account for 80% of tight oil production, to pare back spend on growth and generate cash flow.
What growth there is by end 2020 will come mostly from the Majors (ExxonMobil, Chevron, BP and Shell) whose plans are unaffected by capital constraints.
There’s a certain irony that the free market, through shareholder influence, is succeeding in slowing growth – to OPEC’s advantage.
Time will tell how long it lasts – we think we’ll see tight oil growth recover in 2021 though not back to peak rates.
What about OPEC production? A lot of OPEC oil is off the market – volumes are 2.5 million b/d below a year ago. Around half of that is involuntary, due to U.S. sanctions on Venezuelan and Iranian exports. The other 1.2 million b/d are deliberate cuts by OPEC+. Admirable adherence by key producers in the OPEC+ group has been instrumental in balancing the market and holding Brent above U.S.$60 this year. Without cuts, prices would be much lower.
What does OPEC need to do in December? The current agreement on cuts expires in March 2020. OPEC+ needs to rollover through to the end of 2020. But with global supply growth outpacing demand in 2020, we’ll need further cuts if demand growth disappoints again. OPEC will have to move promptly, in this case, and take out additional production if it wants to support price.
Will fundamentals or geopolitics drive the market in 2020? A bit of both. Tension in the Middle East and U.S. global influence are risks again next year. U.S. foreign policy has been emboldened by the rise of tight oil in 2019, indirectly affecting export sanctions – on Venezuela and Iran – and the attack on the giant Abqaiq facility in Saudi Arabia in September.
None of the geopolitical challenges of 2019 has gone away. But we can see signs already that the U.S. is refocusing on domestic policy in the run-up to the presidential election next November.
Source: Wood Mackenzie
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Thursday, 24 October 19
PANAMAX: NEGATIVE SENTIMENT IN THE MARKET AS IT CONTINUES TO WEAKEN - FEARNLEYS
Capesize
The market has continued to slide the last week, as lack of fresh requirements and a slight oversupply of tonnage heading towards Sout ...
Wednesday, 23 October 19
CHINA'S 2019 COAL IMPORTS SET TO RISE MORE THAN 10%: ANALYSTS - REUTERS
China, the world’s top coal buyer, is on track to boost imports of the fuel by more than 10% this year, traders and analysts said on Tuesday, ...
Wednesday, 23 October 19
SHIPPING MARKET INSIGHT - INTERMODAL
Moving closer to the end of the year, we are facing what the market was expecting for quite a while, the ship repair sector booming with the shipya ...
Tuesday, 22 October 19
DRY BULK: DESPITE THE DOWNWARD CORRECTION NOTED OVER THE PAST MONTH, RATES ARE STILL HOLDING OFF AT FAVORABLE LEVELS - ALLIED SHIPPING
Despite the downward correction that has been noted in the dry bulk market over the past month, rates are still holding off at favorable levels. Ev ...
Monday, 21 October 19
SHIPPERS CHANGE COURSE AS FUEL RULES TARGET SULPHUR EMISSIONS - WOOD MACKENZIE
The International Maritime Organization (IMO), the industry’s regulator, will require all ships to reduce the level of sulphur in their engin ...
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- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Meralco Power Generation, Philippines
- Essar Steel Hazira Ltd - India
- Salva Resources Pvt Ltd - India
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Power Finance Corporation Ltd., India
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Bangladesh Power Developement Board
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Economic Council, Georgia
- Minerals Council of Australia
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement - Thailand
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- Edison Trading Spa - Italy
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- Bhushan Steel Limited - India
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- McConnell Dowell - Australia
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Formosa Plastics Group - Taiwan
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Singapore Mercantile Exchange
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Gujarat Mineral Development Corp Ltd - India
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mjunction Services Limited - India
- Grasim Industreis Ltd - India
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- Tata Chemicals Ltd - India
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- Makarim & Taira - Indonesia
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Kalimantan Lumbung Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
- Borneo Indobara - Indonesia
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- Global Green Power PLC Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- Global Business Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
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