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