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