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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, 17 March 20
IT IS NOW UNQUESTIONABLE THAT 2020 WILL BE A MILESTONE YEAR FOR THE OIL MARKET, AS WELL AS THE WHOLE GLOBAL ECONOMY - ALLIED
It is now unquestionable that 2020 will be a milestone year for the oil market, as well as the whole global economy. The impact from the COVID-19 o ...
Tuesday, 17 March 20
PRELIMINARY FIELD EXPERIENCES ON THE EFFECTS OF LSFO AND VLSFO ON CYLINDER CONDITION - HANS JENSEN LUBRICATORS
It is now more than two months since the 0.5% sulphur cap entered into force, which have affected the operation of more than 70,000 vessels. As ant ...
Monday, 16 March 20
ULTRAMAX: S8 INDONESIA-INDIA AND S10 INDONESIA-CHINA ROUTES BOTH POSTED GAINS OF $1,412, AND $1,289 ON THE WEEK, TO CLOSE AT $5,575, AND $6,089 RESPECTIVELY - BALTIC BRIEFING
Capesize
The Capesize market came to work on Monday, with little expectation, or confidence, that the days ahead were going to bring anything o ...
Sunday, 15 March 20
CAPTIVE COAL OUTPUT RISES 19% IN APRIL-FEBRUARY - FINANCIAL EXPRESS
Coal production from captive mines in the first eleven months of the ongoing fiscal have increased by 18.8% year-on-year (y-o-y) to 51.7 million to ...
Friday, 13 March 20
PANAMAX: SLIGHTLY STRONGER NUMBERS IN BOTH BASINS THIS WEEK - FEARNLEYS
Cape
Still very sad times for the big ships, and merit in further trading at present levels is highly debatable for most tonnage. Spot fixtures ...
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- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Bharathi Cement Corporation - India
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement PLC, Thailand
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Australian Coal Association
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- Ministry of Finance - Indonesia
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Grasim Industreis Ltd - India
- Mercator Lines Limited - India
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- Therma Luzon, Inc, Philippines
- PNOC Exploration Corporation - Philippines
- McConnell Dowell - Australia
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Goldman Sachs - Singapore
- Salva Resources Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Leighton Contractors Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- Cement Manufacturers Association - India
- Metalloyd Limited - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Aboitiz Power Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Deloitte Consulting - India
- Indian Energy Exchange, India
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- SN Aboitiz Power Inc, Philippines
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Price Waterhouse Coopers - Russia
- Binh Thuan Hamico - Vietnam
- Indonesian Coal Mining Association
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GAC Shipping (India) Pvt Ltd
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Central Electricity Authority - India
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- Rio Tinto Coal - Australia
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Sojitz Corporation - Japan
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- Star Paper Mills Limited - India
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
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