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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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Friday, 01 May 20
GLOBAL COAL DEMAND TO FALL BY 8% IN Q1 2020 RELATIVE TO Q1 2019 - IEA
We expect global coal demand to fall by 8% in Q1 2020 relative to Q1 2019. This significant drop was driven by lower demand in the electricity sect ...
Friday, 01 May 20
LUKOIL SHARES LUBRICANT EXPERIENCE AFTER FIRST 100 DAYS OF OPERATION ON VLSFO
KNOWLEDGE TO ELEVATE
After 100 days of VLSFO operation, LUKOIL Marine Lubricants is sharing recent experience on VLSFO operation with NAVIGO M ...
Wednesday, 29 April 20
OIL CLOSES IN ON PEAK OVERSUPPLY - WOOD MACKENZIE
Are we now deep in the abyss? Up to our necks in it, if the oil price is any guide. Brent has now tested sub-US$20/bbl in this downturn and WTI sub ...
Monday, 27 April 20
INCIDENT INVESTIGATION: SEARCH FOR THE CAUSE, NOT THE VILLAIN - GARD
Incident investigations often conclude with placing the blame for an incident on the crew. Causes of the incidents are usually identified as proced ...
Monday, 27 April 20
A 58,000DWT VESSEL WAS FIXED DELIVERY SINGAPORE TRIP VIA INDONESIA, RE-DELIVERY WC INDIA, AT $4,500 - BALTIC BRIEFING
Capesize
The tide turned this week for the Capesize market, as voyage rates registered dramatically falling fuel costs. This was led primarily ...
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- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Sakthi Sugars Limited - India
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Central Electricity Authority - India
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Trasteel International SA, Italy
- VISA Power Limited - India
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Tamil Nadu electricity Board
- The University of Queensland
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Uttam Galva Steels Limited - India
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Makarim & Taira - Indonesia
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- Agrawal Coal Company - India
- Parliament of New Zealand
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- Cigading International Bulk Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Mintek Dendrill Indonesia
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- Economic Council, Georgia
- Australian Coal Association
- CIMB Investment Bank - Malaysia
- ASAPP Information Group - India
- Global Green Power PLC Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Wilmar Investment Holdings
- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Straits Asia Resources Limited - Singapore
- Toyota Tsusho Corporation, Japan
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
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