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