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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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Monday, 21 October 19
COAL TO PLAY SIGNIFICANT ROLE IN SOUTH AFRICA POWER MIX - MINISTER, REUTERS REPORTED
South Africa’s plans for additional power generation over the next decade will involve a variety of energy sources, with coal still playing a ...
Monday, 21 October 19
ULTRAMAX: IN ASIA, TRIPS FROM THE SINGAPORE AREA WERE PAYING BETWEEN $14,000 AND $16,000, DEPENDING ON THE VESSEL SIZE AND DURATION - BALTIC BRIEFING
Capesize
The market traded in a relatively stable supported manner in the Pacific this week while the Atlantic experienced weakening turbulence ...
Friday, 18 October 19
WHY CRUDE TANKER RATES JUST FELL (HALFWAY) BACK TO EARTH - FREIGHT WAVES
Panic drove crude-tanker rates up, very briefly, to mind-bogglingly high assessed levels of around $300,000 per day. Now, the fear factor has been ...
Friday, 18 October 19
SHORT TERM STRENGTH FOR OZ COMMODITIES - BALTIC BRIEFING
Volatility in the global commodity markets is not expected to unduly rattle Australia’s commodity outlook through 2020, but the 2021 picture ...
Friday, 18 October 19
SINGAPORE'S APEX TO LAUNCH LOW-SULFUR FUEL OIL CONTRACT AHEAD OF NEW SHIPPING RULES - REUTERS
Singapore-based Asia Pacific Exchange (APEX) will launch a low-sulfur fuel oil (LSFO) futures contract on Friday aimed at helping shipping and ener ...
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- Banpu Public Company Limited - Thailand
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- Indika Energy - Indonesia
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- Aditya Birla Group - India
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Eastern Energy - Thailand
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Parliament of New Zealand
- Meralco Power Generation, Philippines
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- Central Java Power - Indonesia
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- The University of Queensland
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Indian Oil Corporation Limited
- Baramulti Group, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- PowerSource Philippines DevCo
- Central Electricity Authority - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Bhoruka Overseas - Indonesia
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Therma Luzon, Inc, Philippines
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Chamber of Mines of South Africa
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- Makarim & Taira - Indonesia
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- Antam Resourcindo - Indonesia
- Kapuas Tunggal Persada - Indonesia
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Mercator Lines Limited - India
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- White Energy Company Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sical Logistics Limited - India
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Sarangani Energy Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Karaikal Port Pvt Ltd - India
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