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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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Friday, 29 May 20
KOMIPO ON BEHALF FIVE KOREAN GENCOS INVITED COAL BIDS FOR 5,700 & 4999 NCV COAL FOR AUGUST 2020 LOADING
COALspot.com: South Korea’s Korea Midland Power Co.,Ltd (KOMIPO) on behalf five (5) Korean Gencos has Issued an International Tender for tota ...
Friday, 29 May 20
DRY BULK SHIPPING: NO QUICK RECOVERY FOR THE DRY BULK MARKET AS COVID-19 DIGS DEEPER
The outlook is poor for dry bulk, as the negative demand shock and overcapacity come together to send rates to multi-year lows, even a return to wo ...
Thursday, 28 May 20
COVID-19: A FORCE MAJEURE EVENT? - KYPRIANOU
KNOWLEDGE TO ELEVATE
While seeing the unexpected COVID-19 outbreak expanding worldwide and the first cases being identified in Cyprus, the com ...
Thursday, 28 May 20
OIL DEMAND RECOVERED BY 20% IN MAY AGAINST APRIL: RUSSIAN ENERGY MINISTER - TASS
Oil demand remains at a low level but the demand in May increased by 20% against April, Russian Energy Minister Alexander Novak said, cited by the ...
Thursday, 28 May 20
MARKET INSIGHT - INTERMODAL
Earlier in May, China’s top leaders convened for the annual National People's Congress, following over two months of delays due to the co ...
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- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Iligan Light & Power Inc, Philippines
- New Zealand Coal & Carbon
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Uttam Galva Steels Limited - India
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- Agrawal Coal Company - India
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- Planning Commission, India
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Borneo Indobara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mintek Dendrill Indonesia
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- Siam City Cement - Thailand
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Ministry of Transport, Egypt
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- Anglo American - United Kingdom
- India Bulls Power Limited - India
- LBH Netherlands Bv - Netherlands
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- Aboitiz Power Corporation - Philippines
- Oldendorff Carriers - Singapore
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- Altura Mining Limited, Indonesia
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- Gujarat Sidhee Cement - India
- Sindya Power Generating Company Private Ltd
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Jorong Barutama Greston.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Star Paper Mills Limited - India
- Formosa Plastics Group - Taiwan
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- Aditya Birla Group - India
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- GMR Energy Limited - India
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Kumho Petrochemical, South Korea
- Thiess Contractors Indonesia
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
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