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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, 09 April 20
SUSPENSION OF WRONGFUL TRADING IN LIGHT OF COVID 19 - WF&W
KNOWLEDGE TO ELEVATE
DIRECTORS’ PERSONAL LIABILITY FOR WRONGFUL TRADING – RELIEF DURING THE CORONAVIRUS CRISIS
As the UK&rsquo ...
Wednesday, 08 April 20
LESSONS LEARNED FROM SCRUBBER INSTALLATION AND OPERATION - ABS
KNOWLEDGE TO ELEVATE
At the beginning of this year, the IMO’s global sulfur cap on marine fuels entered into force and shipowners who ch ...
Wednesday, 08 April 20
MARKET INSIGHT - INTERMODAL
With lockdown measures around the globe tightening during the last weeks of Q1, there is finally a feeling that most countries are slowly but stead ...
Tuesday, 07 April 20
SHIPPING MARKET ANALYSIS - ALLIED
With the first quarter of 2020 now firmly written in the books, it is worth examining what we have witnessed so far in the tanker market. Undoubted ...
Tuesday, 07 April 20
IS CHINA EMBARKING ON A MAJOR EXPANSION OF COAL-FIRED POWER GENERATION? - WOOD MACKENZIE
As energy companies worldwide grapple with the economic impact of the coronavirus pandemic, long-term planning continues. Ahead of the release of t ...
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- Salva Resources Pvt Ltd - India
- Indian Oil Corporation Limited
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Maharashtra Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Marubeni Corporation - India
- Iligan Light & Power Inc, Philippines
- Indogreen Group - Indonesia
- London Commodity Brokers - England
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- PTC India Limited - India
- White Energy Company Limited
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Ceylon Electricity Board - Sri Lanka
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Ministry of Finance - Indonesia
- Indika Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Bharathi Cement Corporation - India
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Attock Cement Pakistan Limited
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Baramulti Group, Indonesia
- Eastern Coal Council - USA
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- Thai Mozambique Logistica
- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Mercuria Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
- Rio Tinto Coal - Australia
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- Formosa Plastics Group - Taiwan
- GVK Power & Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- Borneo Indobara - Indonesia
- Globalindo Alam Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- AsiaOL BioFuels Corp., Philippines
- Meenaskhi Energy Private Limited - India
- Antam Resourcindo - Indonesia
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Malabar Cements Ltd - India
- MS Steel International - UAE
- Sojitz Corporation - Japan
- Aditya Birla Group - India
- South Luzon Thermal Energy Corporation
- Kepco SPC Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- Electricity Authority, New Zealand
- OPG Power Generation Pvt Ltd - India
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- Straits Asia Resources Limited - Singapore
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Bangladesh Power Developement Board
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
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