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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, 01 April 20
TRADERS SCRAMBLE TO SELL CHEAP CRUDE CARGOES AS GLUT GROWS - REUTERS
Oil traders across the globe are offering cargoes far in advance as rapidly vanishing demand drives key physical crude prices to multi-decade lows, ...
Wednesday, 01 April 20
MARKET INSIGHT - INTERMODAL
There is an old, allegedly Chinese, saying suggesting that living in “interesting” times usually refers to times of trouble. The latest ...
Tuesday, 31 March 20
FREIGHT MARKET: DRY BULKERS - SPOT MARKET 23-29 MARCH 2020
Capesize
The rebound in freight rates resumed this past week, with rates man-aging to post further gains by week’s end. The BCI is in negat ...
Tuesday, 31 March 20
DRY BULK: Q1 HAS BEEN THE WORST QUARTER NOTED FOR MORE THAN 3 YEARS NOW - ALLIED RESEARCH
At this point, the Covid-19 pandemic seems to be monopolizing all market (as well as all other) discussions across the world and any market insight ...
Tuesday, 31 March 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.43 PCT - XINHUA
China Taiyuan coal transaction price index stood at 132.17 points Monday, down 0.43 percent week on week.
The index, released by Chi ...
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- Jorong Barutama Greston.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- Australian Coal Association
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Uttam Galva Steels Limited - India
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- Kalimantan Lumbung Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Bhatia International Limited - India
- GMR Energy Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Sakthi Sugars Limited - India
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- McConnell Dowell - Australia
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Antam Resourcindo - Indonesia
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Meralco Power Generation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Larsen & Toubro Limited - India
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Indo Tambangraya Megah - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Aditya Birla Group - India
- Directorate General of MIneral and Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- AsiaOL BioFuels Corp., Philippines
- Vedanta Resources Plc - India
- VISA Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Economic Council, Georgia
- Petron Corporation, Philippines
- Energy Development Corp, Philippines
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Semirara Mining Corp, Philippines
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Rio Tinto Coal - Australia
- Thai Mozambique Logistica
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Bangladesh Power Developement Board
- Indogreen Group - Indonesia
- Global Green Power PLC Corporation, Philippines
- Merrill Lynch Commodities Europe
- Latin American Coal - Colombia
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Malabar Cements Ltd - India
- Goldman Sachs - Singapore
- Sinarmas Energy and Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- Orica Mining Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
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