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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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Thursday, 21 May 20
KOMIPO INVITED BIDS FOR TOTAL 610000 MT OF LCV AND HCV COAL FOR 2H 2020
COALspot.com: South Korea’s Korea Midland Power Co. Ltd. (KOMIPO) has Issued an International Tender for 130,000 mt of 5700 NCV coal an ...
Wednesday, 20 May 20
ADARO ENERGY BOOKED A 5% INCREASE IN COAL PRODUCTION VOLUME Y-O-Y IN 1Q2020
PT. Adaro Energy Tbk, Indonesia’s one of the largest coal miner, booked a 5% increase in coal production volume year-over-year in 1Q2020. The ...
Wednesday, 20 May 20
BRAZIL SOYBEAN EXPORTS HAVE BEEN SURGING THIS YEAR - BANCHERO COSTA
Brazil soybean exports have been surging this year, thanks to a combination of strong demand from China, a bumper crop, and favourable exchange rat ...
Wednesday, 20 May 20
MARKET INSIGHT
Seafarers keep maritime trade going so that the food, raw materials, energy and manufactured goods on which so many depend can continue moving arou ...
Tuesday, 19 May 20
AMENDMENT OF THE INDONESIAN MINING LAW: TYING UP LOOSE ENDS - UMBRA
KNOWLEDGE TO ELEVATE
The finalized draft of Law on the amendment of the Mining Law (Bill) was publicly released on 11 May 2020 and was then ap ...
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- Uttam Galva Steels Limited - India
- Mercator Lines Limited - India
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- Krishnapatnam Port Company Ltd. - India
- The Treasury - Australian Government
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Marubeni Corporation - India
- Sarangani Energy Corporation, Philippines
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
- Planning Commission, India
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Miang Besar Coal Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- The University of Queensland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- India Bulls Power Limited - India
- Star Paper Mills Limited - India
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- Kobexindo Tractors - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- Agrawal Coal Company - India
- Merrill Lynch Commodities Europe
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Tamil Nadu electricity Board
- Madhucon Powers Ltd - India
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- Medco Energi Mining Internasional
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Parry Sugars Refinery, India
- CIMB Investment Bank - Malaysia
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- SMC Global Power, Philippines
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Independent Power Producers Association of India
- Electricity Authority, New Zealand
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- Central Java Power - Indonesia
- GMR Energy Limited - India
- Jindal Steel & Power Ltd - India
- TeaM Sual Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
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