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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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- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- Krishnapatnam Port Company Ltd. - India
- Mercuria Energy - Indonesia
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- GMR Energy Limited - India
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Planning Commission, India
- Ambuja Cements Ltd - India
- Tata Chemicals Ltd - India
- Jaiprakash Power Ventures ltd
- The University of Queensland
- Bharathi Cement Corporation - India
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Semirara Mining Corp, Philippines
- Renaissance Capital - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
- Indonesian Coal Mining Association
- TeaM Sual Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- VISA Power Limited - India
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
- Economic Council, Georgia
- Siam City Cement - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- Heidelberg Cement - Germany
- Commonwealth Bank - Australia
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Deloitte Consulting - India
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Wood Mackenzie - Singapore
- Energy Link Ltd, New Zealand
- Australian Coal Association
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- Merrill Lynch Commodities Europe
- Bhushan Steel Limited - India
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Central Java Power - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- Parliament of New Zealand
- Directorate Of Revenue Intelligence - India
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
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