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Friday, 17 April 20
OPEC BRACES FOR OIL MARKET'S "HISTORIC SHOCK"
 OPEC released its much anticipated April monthly report.
Crude Oil Price Movements
Crude oil prices collapsed in March 2020, recording their deepest monthly drop since the global financial crisis in 2008. The ramifications of the COVID-19 pandemic were the main driving force, resulting in unprecedented worldwide oil demand shock and massive sell-offs in the global oil markets, amid a significant crude surplus. The OPEC Reference Basket (ORB) value was down by $21.61, or 38.9%, m-o-m, to stand at $33.92/b, the lowest monthly value since September 2003. ICE Brent declined by $21.75, or 39.2%, m-o-m, to average $33.73/b, while NYMEX WTI fell $20.09, or 39.8%, to average $30.45/b. The term structure of all three crude benchmarks – ICE Brent, NYMEX WTI and DME Oman – moved to a super contango in March, and money managers cut speculative net long positions.
World Economy
The world economy is forecast to face a severe recession in 2020, declining by 1.5%, following global economic growth of 2.9% in the previous year. Following tender signs of improvement at the beginning of the year, expectations for global economic growth were quickly burdened by the strong impact of the COVID-19 pandemic. Within the OECD, the US is forecast to contract by 4.1% in 2020, following growth of 2.3% in 2019. An even larger decline is expected in the Euro-zone, where economic activity is forecast to fall by 6.0% in 2020, compared to growth of 1.2% in 2019. Japan is forecast to contract by 3.9% in 2020, comparing to growth of 0.7% in 2019. China’s 2020 GDP is forecast to grow by 1.5%, recovering from a sharp contraction in 1Q20 and following growth of 6.1% in 2019. India is forecast to grow by only 2.0%, a sharp slowdown from already weakening growth of 5.3% in 2019. Brazil’s economy is forecast to contract by 2.4% in 2020, following growth of 1.0% in 2019. Russia’s economy is forecast to contract by 0.5% in 2020, after growth of 1.4% in 2019, not only due to COVID-19, but also because of the considerable decline in oil prices. As risk remains to be skewed to the downside, further revisions may be warranted going forward.
World Oil Demand
World oil demand growth forecast for 2019 is kept unchanged at 0.83 mb/d, compared with the previous month’s assessment. For 2020, the world oil demand growth forecast is revised lower by 6.9 mb/d, to a historical drop of around 6.8 mb/d. The contraction in the 2Q of this year is expected to be around 12 mb/d, with April witnessing the worst contraction at about 20 mb/d. The impact of the COVID-19 outbreak in China in 1Q20, and its negative impact on transportation and industrial fuels in the country, has since spread globally and is now affecting oil demand growth in most other countries and regions, with an unprecedented impact on global oil demand, transportation fuels in particular. As a result, OECD oil demand is revised lower by 3.7 mb/d to decline by 4.0 mb/d, while non-OECD oil demand growth is adjusted lower by 3.2 mb/d to contract by 2.9 mb/d for the year. Considering latest developments, and the large uncertainties going forward, downward risks remain significant, suggesting possibility of further adjustments, especially in the 2Q, should new data and further developments warrant revisions.
World Oil Supply Non-OPEC oil supply growth in 2019 is revised down by 0.01 mb/d from the previous month’s assessment and is now estimated at 1.98 mb/d. For 2020, non-OPEC oil supply is forecast to decline by 1.50 mb/d, a downward revision of 3.26 mb/d from the previous projection. The impact of COVID-19, ensuing global economic recession and oil demand shock, will also lead to supply disruptions. Benchmark oil prices plunge prompted companies to respond by cutting capital expenditure to the lowest in 13 years. The 2020 oil supply growth forecast for the US was revised down by 1.05 mb/d to show a decline of 0.15 mb/d y-o-y. The supply growth for the 10 non-OPEC countries participating in the Declaration of Cooperation has also been adjusted lower. Oil supply in 2020 is now forecast to show growth only in Norway, Brazil, Guyana and Australia. OPEC NGLs production in 2019 is estimated to have grown by 0.04 mb/d to average 4.79 mb/d and for 2020 will grow by 0.04 mb/d to average 4.83 mb/d. In March, OPEC crude oil production increased by 821 tb/d m-o-m to average 28.61 mb/d, according to secondary sources.
Product Markets and Refining Operations
Global refinery margins globally showed mixed performance during March. In the US, margins weakened as strength in gasoil/diesel was offset by losses in gasoline cracks, as complex margins came close to negative territory. In Europe, product markets strengthened slightly at the middle of the barrel, supported by a fall in feedstock prices. An already relatively tight global gasoil market saw support from output cuts and continued critical industrial activities for essential services and goods amid COVID-19. However, in Asia, margins eased towards the end of the month, pressured by a weaker top of the barrel, despite healthy gasoil and fuel oil crack spreads.
Tanker Market
The tanker market has been one of few segments of the oil industry that enjoyed positive momentum in March. A sudden surge in crude exports boosted demand for VLCCs, which pulled up Suezmax rates as well. Dirty spot freight rates declined mid-month before climbing again as the market was supported by high demand for tankers as charterers rushed to place cargoes amid a collapse in demand due to the COVID-19 pandemic. Increased options for time-chartering, including for floating storage, underscored the build-up of excess supply of crude and products in the market. For the month, dirty spot rates averaged 69% higher m-o-m in March. Clean tanker spot freight rates rose 12% m-o-m, as the need to find homes for excess product supplies supported the market.
Trade
Crude and product trade flows have been notably affected by the COVID-19 pandemic and the uncertain outlook going forward, although there has been some lag in how the various regions have been affected. US crude exports had a strong start to the year, averaging 3.5 mb/d in 1Q20, a gain of 0.8 mb/d over the same quarter last year, as the US remained a net liquids exporter for the seventh-consecutive month. Meanwhile, China’s crude imports averaged 10.5 mb/d over the first two months of 2020, declining from December as disruptions caused by COVID-19 led to some imports being diverted or delayed. Product trade was also affected, with imports and exports averaging 0.3 mb/d lower in the first two months of the year compared to December. Official data showed India’s crude imports increasing slightly in February, although some estimates show a higher jump as the country took in some discounted cargoes diverted from China. India’s crude and product trade is likely to be broadly impacted in March by a government-ordered lockdown.
Stock Movements
OECD commercial oil stocks rose by 5.6 mb, m-o-m, in February to stand at 2,945 mb. This was 64.3 mb higher than the same time one year ago and 24.7 mb above the latest five-year average. Within components, crude stocks fell by 6.1 mb, while product stocks rose by 11.7 mb, m-o-m. In terms of days of forward cover, OECD commercial stocks rose by 5.0 days, m-o-m, in February to stand at 72.7 days. This was 11.5 days above the same period in 2019, and 10.3 days above the latest five-year average. Preliminary data for March showed that US total commercial oil stocks increased by 8.2 mb, m-o-m, to stand at 1,922 mb. This was 31.8 mb, or 1.7%, above the same period a year ago, and 16.2 mb, or 0.8%, lower than the latest five-year average. Within components, crude stocks rose by 25.1 mb, while product stocks fell by 16.8 mb, m-o-m.
Balance of Supply and Demand
Demand for OPEC crude in 2019 stood at 29.9 mb/d, 1.2 mb/d lower than the 2018 level. Following the recent agreement reached at the extraordinary OPEC and non-OPEC Ministerial Meetings, the demand for OPEC crude in 2020 is expected at 24.5 mb/d, around 5.4 mb/d lower than the 2019 level, though this remains heavily subject to uncertainty surrounding current market conditions.
Source: OPEC
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Wednesday, 06 May 20
KOSPO INVITED COAL BIDS FOR LOW CALORIFIC VALUE COAL
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 160,000 Metric Tons (MT) Low Calorific Value Coal for J ...
Wednesday, 06 May 20
COST CHALLENGES IN A US$20/BBL WORLD - WOOD MACKENZIE
A new approach is needed to ensure supply sector resilience
How will US$20/bbl affect the oil and gas supply chain?
It’s going to g ...
Wednesday, 06 May 20
MARKET INSIGHT - INTERMODAL
It comes as no surprise that activity in the dry bulk SnP market remains soft, with asset values caught in the downward spiral generated by the Cov ...
Wednesday, 06 May 20
FLOATING STORAGE OF OIL CARGOES - STANDARD CLUB
KNOWLEDGE TO ELEVATE
Due to a combination of circumstances there is now a worldwide shortage of storage space ashore for both unrefi ...
Wednesday, 06 May 20
IRON ORE TRADE REMAINS REMARKABLY RESILIENT THIS YEAR, AT LEAST IN ASIA - BANCHERO COSTA
Iron ore trade remains remarkably resilient this year, at least in Asia, despite the global economic impact from COVID-19. In the first 4 months of ...
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- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parry Sugars Refinery, India
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Samtan Co., Ltd - South Korea
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement - Thailand
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- Timah Investasi Mineral - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Vedanta Resources Plc - India
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
- CNBM International Corporation - China
- Trasteel International SA, Italy
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Antam Resourcindo - Indonesia
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- The Treasury - Australian Government
- VISA Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- Miang Besar Coal Terminal - Indonesia
- Petron Corporation, Philippines
- Africa Commodities Group - South Africa
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- Mjunction Services Limited - India
- The University of Queensland
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Thiess Contractors Indonesia
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Videocon Industries ltd - India
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Electricity Generating Authority of Thailand
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
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