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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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Wednesday, 06 May 20
KOSPO INVITED COAL BIDS FOR LOW CALORIFIC VALUE COAL
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 160,000 Metric Tons (MT) Low Calorific Value Coal for J ...
Wednesday, 06 May 20
COST CHALLENGES IN A US$20/BBL WORLD - WOOD MACKENZIE
A new approach is needed to ensure supply sector resilience
How will US$20/bbl affect the oil and gas supply chain?
It’s going to g ...
Wednesday, 06 May 20
MARKET INSIGHT - INTERMODAL
It comes as no surprise that activity in the dry bulk SnP market remains soft, with asset values caught in the downward spiral generated by the Cov ...
Wednesday, 06 May 20
FLOATING STORAGE OF OIL CARGOES - STANDARD CLUB
KNOWLEDGE TO ELEVATE
Due to a combination of circumstances there is now a worldwide shortage of storage space ashore for both unrefi ...
Wednesday, 06 May 20
IRON ORE TRADE REMAINS REMARKABLY RESILIENT THIS YEAR, AT LEAST IN ASIA - BANCHERO COSTA
Iron ore trade remains remarkably resilient this year, at least in Asia, despite the global economic impact from COVID-19. In the first 4 months of ...
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- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Indo Tambangraya Megah - Indonesia
- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- Ministry of Finance - Indonesia
- Goldman Sachs - Singapore
- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- SN Aboitiz Power Inc, Philippines
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- New Zealand Coal & Carbon
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Straits Asia Resources Limited - Singapore
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- Mercator Lines Limited - India
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- Power Finance Corporation Ltd., India
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- TeaM Sual Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Miang Besar Coal Terminal - Indonesia
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- Tata Chemicals Ltd - India
- Essar Steel Hazira Ltd - India
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Marubeni Corporation - India
- Iligan Light & Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Samtan Co., Ltd - South Korea
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Ind-Barath Power Infra Limited - India
- Central Java Power - Indonesia
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- International Coal Ventures Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Xindia Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- Anglo American - United Kingdom
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- CNBM International Corporation - China
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bank of Tokyo Mitsubishi UFJ Ltd
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- Baramulti Group, Indonesia
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
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