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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, 24 March 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.28 PCT - XINHUA
China Taiyuan coal transaction price index stood at 132.74 points Monday, down 0.28 percent week on week.
The index, released by Chi ...
Monday, 23 March 20
CHARTERPARTY REQUIREMENTS TO NOTIFY CLAIMS - TAKE CARE! - WFW
KNOWLEDGE TO ELEVATE
Voyage charterparties frequently require the owner to notify any claim with supporting documents within a relatively shor ...
Monday, 23 March 20
COAL INDIA LIMITED'S ONE-DAY OUTPUT PEAKS AT 3.17 MT - THE HINDU
Coal India Limited (CIL) output peaked at a new high of 3.17 million tonnes (MT) on March 20, overtaking the 3.14 MT production recorded on March 2 ...
Monday, 23 March 20
KOMIPO INVITED BIDS FOR 1.45 MILLION TONS OF COAL FOR JUNE & JULY 2020 LOADING
COALspot.com: Korea Midland Power Co.,Ltd (KOMIPO), on behalf of five Korean Gencos, has issued an international tender for total 1,450,000 MT (&pl ...
Saturday, 21 March 20
PANAMAX: 82,000DWT SHIP AGREED $4,250 FOR A COAL TRIP VIA INDONESIA REDELIVERY SOUTH CHINA - BALTIC BRIEFING
Capesize
The Capesize market made some headway this past week despite being buffeted by the global pandemic storm. With the market in a constan ...
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- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- Directorate Of Revenue Intelligence - India
- Indian Oil Corporation Limited
- MS Steel International - UAE
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Africa Commodities Group - South Africa
- Georgia Ports Authority, United States
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Essar Steel Hazira Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- Heidelberg Cement - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CNBM International Corporation - China
- London Commodity Brokers - England
- Price Waterhouse Coopers - Russia
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- India Bulls Power Limited - India
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- The University of Queensland
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- Dalmia Cement Bharat India
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- Uttam Galva Steels Limited - India
- Planning Commission, India
- Romanian Commodities Exchange
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Independent Power Producers Association of India
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- Lanco Infratech Ltd - India
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Borneo Indobara - Indonesia
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Star Paper Mills Limited - India
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Karaikal Port Pvt Ltd - India
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Sakthi Sugars Limited - India
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Aditya Birla Group - India
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- IHS Mccloskey Coal Group - USA
- Salva Resources Pvt Ltd - India
- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Posco Energy - South Korea
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Tata Chemicals Ltd - India
- Videocon Industries ltd - India
- Mjunction Services Limited - India
- Bulk Trading Sa - Switzerland
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Central Java Power - Indonesia
- McConnell Dowell - Australia
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- GVK Power & Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
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