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