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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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Monday, 18 May 20
TAKING ADVANTAGE OF VIRUS DISTRACTION - BALTIC EXCHANGE
As the industry grapples to deal with exceptional Covid-19-related challenges, a deeper threat is coming to the fore. At this time of crisis, more ...
Monday, 18 May 20
THERMAL COAL SPOT PRICE TUMBLES 25 PER CENT, PUTTING PRESSURE ON SOME PRODUCERS - ABC RURAL
The spot price for thermal coal has fallen 25 per cent per cent in the past month with one leading analyst saying it is because of a reduction in d ...
Monday, 18 May 20
CHINA'S COAL OUTPUT UP 1.3 PCT IN JANUARY-APRIL: XINHUA
Output of raw coal in China rose 1.3 percent year on year to 1.15 billion tonnes in the first four months this year, official data showed.
&nbs ...
Sunday, 17 May 20
A 55,000 OPEN ILIGAN FIXING AT $6,500 VIA INDONESIA REDELIVERY INDIA - BALTIC BRIEFING
Capesize
A precipitous fall in the market this week had the Capesize 5TC shedding over 50 per cent in value. A small rebound at the end of the ...
Friday, 15 May 20
CHINA'S COAL CONSUMPTION TO FALL Y/Y IN SECOND QUARTER, IMPROVEMENT EXPECTED IN SECOND HALF - INDUSTRY BODY: REUTERS
China’s coal consumption is expected to decline in the second quarter from a year earlier, but will see an improvement in the second half of ...
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- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Energy Link Ltd, New Zealand
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- Pendopo Energi Batubara - Indonesia
- Planning Commission, India
- Riau Bara Harum - Indonesia
- OPG Power Generation Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Economic Council, Georgia
- Jorong Barutama Greston.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- Merrill Lynch Commodities Europe
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- Australian Coal Association
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Global Coal Blending Company Limited - Australia
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- Vizag Seaport Private Limited - India
- Parliament of New Zealand
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Essar Steel Hazira Ltd - India
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Rio Tinto Coal - Australia
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Straits Asia Resources Limited - Singapore
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Carbofer General Trading SA - India
- VISA Power Limited - India
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Baramulti Group, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Bangladesh Power Developement Board
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- Gujarat Sidhee Cement - India
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- Directorate Of Revenue Intelligence - India
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Deloitte Consulting - India
- IHS Mccloskey Coal Group - USA
- London Commodity Brokers - England
- Agrawal Coal Company - India
- White Energy Company Limited
- Altura Mining Limited, Indonesia
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
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