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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-zero, albeit briefly and in somewhat freakish circumstances. Where are the signs of stress across the oil value chain? And what are the prospects of finding an exit route to recovery? I talked it through with Ann-Louise Hittle of our Macro Oils team.
First, oil demand, which we think may be close to bottoming out. Decline has been sharp and deep as Covid-19 takes its toll on global economic activity. Much of the world is currently in lockdown, with more than 65% of the world’s population under travel restrictions. Global air travel and car use have nosedived in many countries. The big hit has been on jet fuel demand (down 50% year-on-year) and gasoline (down 25%). Diesel and fuel oil – used to transport goods by truck, ship and rail – have held relatively steady.
The net effect will be April’s demand falling by an average of 15 million to 18 million b/d year on year, based on the early April forecast from our Macro Oils Service. It’s a big number but may be bigger still on certain days or weeks in April and May. Some estimates have suggested declines of 20 million b/d or more.
A key question is when the global economic recovery that’s needed to kick start oil demand growth again will begin. Right now, we appear to be in limbo. India, France and the UK, among other big economies, have extended lockdowns into May. Italy, Spain, Austria and others have started to ease restrictions while several US states are considering re-opening in May. There are early signs of US gasoline demand stabilising.
China though is the model to watch as it emerges from lockdown. It has already started ratcheting up crude purchases in April to supply a reviving economy.
Second, inventory is building at superfast rates globally. Cushing, Oklahoma, is a microcosm of the wider picture. Oil prices in Texas have incentivised producers to send crude to the Cushing hub; weak demand from refineries in the Mid-West and Gulf Coast have kept it there. Storage tanks are filling up rapidly – the three largest weekly builds on record were in consecutive weeks from late March, based on Genscape’s proprietary twice-weekly tank monitoring.
Cushing’s tightening storage capacity played a central role in WTI’s ignominious dive into negative prices on 20 April, ahead of the May contract expiry. Traders and financial players were effectively ambushed – having to pay counterparties up to US$37/bbl to roll out of their expiring May contracts and into June.
Storage globally will stay tight so long as oversupply persists. Genscape estimates Cushing‘s spare capacity of up to 15 million b/d will be full within weeks, and other landlocked hubs – the Caspian for one – are in a similar position. But in reality, producers everywhere are worried their crude won’t be able to find a home.
Third, the world is still awash with supply, which unlike demand is still close to pre-crisis levels. Low prices have killed off new investment but have not yet had much impact on production. So far, we estimate barely one million b/d of onstream non-OPEC production has been shut in.
These are sizeable volumes but, given the scale of the market oversupply, insignificant. We estimate over 15 million b/d of production generates negative operating cash flow, now that prices have lurched lower. As storage fills up, more wells and fields will be shut-in during the coming weeks. Curtailed volumes will quickly mount up.
What must happen for the oil market to start rebalancing and prices to recover? May is important for supply, with OPEC+ cuts taking effect and removing up to 7 million b/d from the market by the end of the month. We expect a slow return to “normal” life in H2 2020 to help demand recover, though most likely staying below pre-crisis levels.
A strong bounce in demand as the world emerges from recession will be needed to soak up the overhang of inventory, which threatens to reach record levels by summer. Nothing, however, can be taken for granted while coronavirus still poses a threat to economic – and social – activity.
Source: Wood Mackenzie
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Tuesday, 02 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.86 PCT - XINHUA
China Taiyuan coal transaction price index stood at 123.95 points Monday, down 0.86 percent week on week.
The index, released by Chi ...
Tuesday, 02 June 20
THE HISTORIC DECLINE OF US COAL - WOOD MACKENZIE
The first commercial power plant in the US was Thomas Edison’s coal-fired Pearl Street station in lower Manhattan, which started operating in ...
Tuesday, 02 June 20
COAL INDIA'S MAY SALES DRIVEN SHARPLY LOWER BY SLUMP IN POWER DEMAND - REUTER
Coal India’s sales fell 23.3% in May as utilities refrained from purchases amid record stockpiles and tepid demand because of a nationwide lo ...
Tuesday, 02 June 20
TUAH TURANGGA AGUNG RECORDED 4.54 MILLION TONS OF COAL SALES IN THE FIRST FOUR MONTHS OF 2020
PT United Tractors Tbk through its subsidiary, PT Tuah Turangga Agung recorded 4.54 million tons of coal sales in the first four months of 2020, up ...
Tuesday, 02 June 20
SOURING SINO-AUSTRALIA TRADE RELATIONS - BALTIC EXCHANGE
Cooling relations between the commodity powerhouses of China and Australia may point to trade troubles ahead when the world emerges from the Covid- ...
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- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- McConnell Dowell - Australia
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- Wilmar Investment Holdings
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- Star Paper Mills Limited - India
- Coastal Gujarat Power Limited - India
- Essar Steel Hazira Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Lanco Infratech Ltd - India
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Meralco Power Generation, Philippines
- Jindal Steel & Power Ltd - India
- GMR Energy Limited - India
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Wood Mackenzie - Singapore
- Bayan Resources Tbk. - Indonesia
- CIMB Investment Bank - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- Bhatia International Limited - India
- Sinarmas Energy and Mining - Indonesia
- MS Steel International - UAE
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- Altura Mining Limited, Indonesia
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Kideco Jaya Agung - Indonesia
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Gujarat Sidhee Cement - India
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Trasteel International SA, Italy
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Grasim Industreis Ltd - India
- European Bulk Services B.V. - Netherlands
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Orica Australia Pty. Ltd.
- The University of Queensland
- Straits Asia Resources Limited - Singapore
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- Pendopo Energi Batubara - Indonesia
- Tamil Nadu electricity Board
- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- VISA Power Limited - India
- Jaiprakash Power Ventures ltd
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Planning Commission, India
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- Neyveli Lignite Corporation Ltd, - India
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- Romanian Commodities Exchange
- Bukit Baiduri Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- AsiaOL BioFuels Corp., Philippines
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Merrill Lynch Commodities Europe
- Heidelberg Cement - Germany
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Videocon Industries ltd - India
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
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