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