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