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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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Thursday, 16 April 20
MARKET INSIGHT - INTERMODAL
As everyone anticipated the results of the OPEC + G20 meeting last week, it was very interesting to watch the reaction of tanker rates that were in ...
Monday, 13 April 20
SUPRAMAX: A 56,000DWT SHIP WAS FIXED DELIVERY PARADIP, REDELIVERY CHINA, AT $4,700 - BALTIC BRIEFING
Capesize
The Capesize market this past week looks to have come off life support and found some improved sentiment. The week began rather ordina ...
Saturday, 11 April 20
FAQ: COVID-19 AND CLUB COVER - UK P&I
KNOWLEDGE TO ELEVATE
The Coronavirus (COVID-19) pandemic has generated a significant number of enquiries and questions from Members in recent ...
Saturday, 11 April 20
KOEN POWER PLANTS INVITED BIDS FOR 1.5 -1.62 MMT OF STEAM COAL
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 1,500,000-1,620,000 Metric Tons (M ...
Friday, 10 April 20
INDIA'S BULKS SUPPLY CHAIN TAKES A HIT DURING LOCKDOWN - WOOD MACKENZIE
India is under a three-week lockdown from 25 March to contain the spread of the coronavirus outbreak. Businesses are shut, and the supply chain is ...
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- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Energy Link Ltd, New Zealand
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Aditya Birla Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
- Sinarmas Energy and Mining - Indonesia
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Videocon Industries ltd - India
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sakthi Sugars Limited - India
- Australian Coal Association
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Carbofer General Trading SA - India
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- Riau Bara Harum - Indonesia
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Wilmar Investment Holdings
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sarangani Energy Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- The University of Queensland
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- Siam City Cement - Thailand
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- TeaM Sual Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Wood Mackenzie - Singapore
- Petron Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- Cement Manufacturers Association - India
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- Indian Oil Corporation Limited
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Tamil Nadu electricity Board
- Heidelberg Cement - Germany
- Borneo Indobara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Mercuria Energy - Indonesia
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Singapore Mercantile Exchange
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- SN Aboitiz Power Inc, Philippines
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