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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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Tuesday, 31 March 20
COAL POWER REMAINS IN GLOBAL DECLINE, DESPITE CHINESE SURGE - SYDNEY MORNING HERALD
The impact of coronavirus has prompted a surge in coal-fired power plant construction permits in China, with the Chinese government issuing more pe ...
Monday, 30 March 20
CORONAVIRUS - IMPLICATIONS FOR SHIPS AND CREW - GARD
KNOWLEDGE TO ELEVATE
Countries around the world are strengthening their border control measures in order to prevent the further spread of COVI ...
Monday, 30 March 20
LAY-UP AND RE-ACTIVATION REVISITED - GARD
KNOWLEDGE TO ELEVATE
The COVID-19 pandemic has affected the maritime industry in previously unthinkable ways. Ports around the world are denyi ...
Monday, 30 March 20
PANAMAX: INDONESIA LACKED VOLUME, PARTLY DUE TO FORCE MAJEURE IN INDIAN PORTS - BALTIC BRIEFING
Capesize
As Covid-19 continued to ratchet up tensions across the globe, the Cape market dealt with the change to remote working. Most regions o ...
Saturday, 28 March 20
ASIA'S COAL MARKETS DIVERGE ON QUALITY LINES AS CORONAVIRUS HITS INDIA - REUTERS
Asia’s seaborne coal market is increasingly diverging between higher-quality Australian coal, where prices are holding up despite the economi ...
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- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Africa Commodities Group - South Africa
- Mercuria Energy - Indonesia
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- Manunggal Multi Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Tata Chemicals Ltd - India
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- Bayan Resources Tbk. - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Coal and Oil Company - UAE
- Sical Logistics Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Toyota Tsusho Corporation, Japan
- Cement Manufacturers Association - India
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Australian Coal Association
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- Georgia Ports Authority, United States
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- SMG Consultants - Indonesia
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- TNB Fuel Sdn Bhd - Malaysia
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- Eastern Energy - Thailand
- Aditya Birla Group - India
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- Orica Australia Pty. Ltd.
- PTC India Limited - India
- Lanco Infratech Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Economic Council, Georgia
- Central Java Power - Indonesia
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- White Energy Company Limited
- Directorate Of Revenue Intelligence - India
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