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