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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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Friday, 13 March 20
TOP 4 ACCOUNTING CONSIDERATIONS AFTER THE IMPLEMENTATION OF IMO 2020 - PWC
To install or not to install?
Following the IMO 2020 global low sulphur cap for marine fuel effective since 1 January 2020, many shi ...
Friday, 13 March 20
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Friday, 13 March 20
KOREA SOUTH-EAST POWER INVITED BIDS FOR 390,000 MT OF THERMAL COAL FOR MAY-JUNE 2020 LOADING
COALspot.com: Korea South-East Power Co., Ltd. (KOEN), has issued an international tender for total 390,000 Metric Tons of coal for May & June ...
Thursday, 12 March 20
INDIA 2019 THERMAL COAL IMPORTS RISE 12.6% TO NEARLY 200 MILLION TONNES - REUTERS
India’s thermal coal imports rose 12.6% to nearly 200 million tonnes in 2019, government data reviewed by Reuters showed, reflecting the seco ...
Wednesday, 11 March 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.07 PCT - XINHUA
China Taiyuan coal transaction price index stood at 133.16 points Monday, up 0.07 percent week on week.
The index, released by China ...
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- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- The University of Queensland
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Meralco Power Generation, Philippines
- White Energy Company Limited
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Indo Tambangraya Megah - Indonesia
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- Riau Bara Harum - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- Therma Luzon, Inc, Philippines
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- London Commodity Brokers - England
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- Wilmar Investment Holdings
- VISA Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- International Coal Ventures Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Planning Commission, India
- Bhatia International Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Ind-Barath Power Infra Limited - India
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Eastern Energy - Thailand
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- Energy Link Ltd, New Zealand
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Altura Mining Limited, Indonesia
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- IHS Mccloskey Coal Group - USA
- San Jose City I Power Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Parliament of New Zealand
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Leighton Contractors Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Kideco Jaya Agung - Indonesia
- Medco Energi Mining Internasional
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Vedanta Resources Plc - India
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- PNOC Exploration Corporation - Philippines
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