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