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