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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, 14 May 20
OPEC REVISES DOWN GLOBAL OIL DEMAND FORECAST AGAIN
Crude Oil Price Movements
Crude oil prices recorded a second sharp monthly drop in April, amid an increasing oil surplus in the spot market. Th ...
Thursday, 14 May 20
NEW COVID-19 GUIDELINES FOCUS ON SAFE INTERFACE BETWEEN SHIP AND SHORE STAFF - GARD
At a time when the COVID-19 pandemic is affecting the global population, it is important that ships’ crew and port workers protect each other ...
Wednesday, 13 May 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.4 PCT - XINHUA
China Taiyuan coal transaction price index stood at 124.93 points Monday, down 0.4 percent week on week.
The index, released by Chin ...
Tuesday, 12 May 20
IN THE FIRST 4 MONTHS OF 2020, SOUTH KOREA IMPORTED 46.6 MLN TONNES OF CRUDE OIL BY SEA, A NET DECLINE OF 14.1% YOY - BC
South Korea is certainly one of the countries which has handled better the current Covid-19 crisis. In the first week of May 2020, new cases of ...
Tuesday, 12 May 20
OIL MARKET TURBULENCE PIVOTS FOCUS ON FLOATING STORAGE TECHNICAL NEEDS - LLOYD'S REGISTER
KNOWLEDGE TO ELEVATE
Negative oil prices and off-the-scale volatility in crude markets are positive for floating storage, as the next chapter ...
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- Chamber of Mines of South Africa
- Xindia Steels Limited - India
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- Eastern Coal Council - USA
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- Bhatia International Limited - India
- Wood Mackenzie - Singapore
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- IEA Clean Coal Centre - UK
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- Indian Energy Exchange, India
- Carbofer General Trading SA - India
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- Gujarat Electricity Regulatory Commission - India
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bulk Trading Sa - Switzerland
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- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Singapore Mercantile Exchange
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
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- Aditya Birla Group - India
- Indogreen Group - Indonesia
- Ambuja Cements Ltd - India
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- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ASAPP Information Group - India
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- Standard Chartered Bank - UAE
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- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Riau Bara Harum - Indonesia
- Sindya Power Generating Company Private Ltd
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Australian Commodity Traders Exchange
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Tamil Nadu electricity Board
- Siam City Cement PLC, Thailand
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
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- Agrawal Coal Company - India
- Bangladesh Power Developement Board
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- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
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- Star Paper Mills Limited - India
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- Maheswari Brothers Coal Limited - India
- Sojitz Corporation - Japan
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coal and Oil Company - UAE
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- Meralco Power Generation, Philippines
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- Economic Council, Georgia
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- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
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- Rashtriya Ispat Nigam Limited - India
- Medco Energi Mining Internasional
- Indika Energy - Indonesia
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Manunggal Multi Energi - Indonesia
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Parry Sugars Refinery, India
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- London Commodity Brokers - England
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Barasentosa Lestari - Indonesia
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Vedanta Resources Plc - India
- The Treasury - Australian Government
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- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coastal Gujarat Power Limited - India
- Renaissance Capital - South Africa
- Minerals Council of Australia
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
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- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- Deloitte Consulting - India
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- Africa Commodities Group - South Africa
- Goldman Sachs - Singapore
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- Alfred C Toepfer International GmbH - Germany
- Price Waterhouse Coopers - Russia
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
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