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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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Friday, 01 May 20
GLOBAL COAL DEMAND TO FALL BY 8% IN Q1 2020 RELATIVE TO Q1 2019 - IEA
We expect global coal demand to fall by 8% in Q1 2020 relative to Q1 2019. This significant drop was driven by lower demand in the electricity sect ...
Friday, 01 May 20
LUKOIL SHARES LUBRICANT EXPERIENCE AFTER FIRST 100 DAYS OF OPERATION ON VLSFO
KNOWLEDGE TO ELEVATE
After 100 days of VLSFO operation, LUKOIL Marine Lubricants is sharing recent experience on VLSFO operation with NAVIGO M ...
Monday, 27 April 20
INCIDENT INVESTIGATION: SEARCH FOR THE CAUSE, NOT THE VILLAIN - GARD
Incident investigations often conclude with placing the blame for an incident on the crew. Causes of the incidents are usually identified as proced ...
Monday, 27 April 20
A 58,000DWT VESSEL WAS FIXED DELIVERY SINGAPORE TRIP VIA INDONESIA, RE-DELIVERY WC INDIA, AT $4,500 - BALTIC BRIEFING
Capesize
The tide turned this week for the Capesize market, as voyage rates registered dramatically falling fuel costs. This was led primarily ...
Sunday, 26 April 20
STRONGER BUNKER PRICES FAIL TO RALLY FREIGHT MARKET - FIS
VLSFO bunker prices rebounded by $22.50 to $229/mt in the port of Singapore but failed to turn around the spot freight market.
Some ...
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- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- Georgia Ports Authority, United States
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Australian Coal Association
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- Jaiprakash Power Ventures ltd
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- Sical Logistics Limited - India
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Agrawal Coal Company - India
- Kideco Jaya Agung - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Interocean Group of Companies - India
- White Energy Company Limited
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- India Bulls Power Limited - India
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- Kohat Cement Company Ltd. - Pakistan
- Coastal Gujarat Power Limited - India
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- Ind-Barath Power Infra Limited - India
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- Global Green Power PLC Corporation, Philippines
- Power Finance Corporation Ltd., India
- Standard Chartered Bank - UAE
- Carbofer General Trading SA - India
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- Rashtriya Ispat Nigam Limited - India
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- The University of Queensland
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bulk Trading Sa - Switzerland
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Latin American Coal - Colombia
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- Goldman Sachs - Singapore
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Ceylon Electricity Board - Sri Lanka
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- Borneo Indobara - Indonesia
- Thiess Contractors Indonesia
- Mjunction Services Limited - India
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