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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, 25 March 20
MARKET INSIGHT - INTERMODAL
There is no doubt that the Covid-19 pandemic crisis is a world-shattering event that will change the world as we know it. Societies are facing chal ...
Wednesday, 25 March 20
INDONESIA TO CANCEL RULES REQUIRING DOMESTIC SHIPS FOR COAL, PALM EXPORTS : REFINITIV
Indonesia's government will revoke rules requiring exporters of coal and palm oil to use domestic shipping companies for shipments, Coordinatin ...
Wednesday, 25 March 20
JAN-FEB 2020, INDONESIA SHIPPED 64.5 MLN TONNES OF COAL, UP +3.4% YOY - BANCHERO COSTA
In the 12 months of calendar 2019, Indonesia exported 386.4 mln tonnes of coal, according to vessel tracking data from Refinitiv. This represents a ...
Tuesday, 24 March 20
MARKET ANALYSIS - ALLIED
As countries around the world struggle to take back control of the ongoing COVID-19 pandemic the global economy shuts down bit by bit, leaving only ...
Tuesday, 24 March 20
THE TRIPLE SHOCK OF CORONAVIRUS IN SHIPPING: WILL IT LAST? - DREWRY
Transport capacity shortages, disruptions to supply chains and inability to plan since late January have been a dangerous combination. But will all ...
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- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- SN Aboitiz Power Inc, Philippines
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Eastern Coal Council - USA
- Essar Steel Hazira Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- Billiton Holdings Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Oldendorff Carriers - Singapore
- Bhushan Steel Limited - India
- GVK Power & Infra Limited - India
- Cement Manufacturers Association - India
- Aditya Birla Group - India
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Global Business Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- Altura Mining Limited, Indonesia
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- Minerals Council of Australia
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- Heidelberg Cement - Germany
- Australian Coal Association
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- Formosa Plastics Group - Taiwan
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- Trasteel International SA, Italy
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Eastern Energy - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Kumho Petrochemical, South Korea
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- The State Trading Corporation of India Ltd
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- Australian Commodity Traders Exchange
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- India Bulls Power Limited - India
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Planning Commission, India
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Malabar Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Central Java Power - Indonesia
- Georgia Ports Authority, United States
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
- Savvy Resources Ltd - HongKong
- IHS Mccloskey Coal Group - USA
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- SMC Global Power, Philippines
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Merrill Lynch Commodities Europe
- ICICI Bank Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- Rio Tinto Coal - Australia
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- New Zealand Coal & Carbon
- Kartika Selabumi Mining - Indonesia
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