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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, 06 March 20
SOLID BACKING FOR LNG AS A MARINE FUEL - BALTIC EXCHANGE
When it comes to choosing the best fuel on the near horizon to help the international shipping industry shrink its carbon intensity by 2050, DNV GL ...
Friday, 06 March 20
INDONESIA COAL PRICE REFERENCE UP AGAIN THIS MONTH
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Thursday, 05 March 20
PANAMAX: SHIP-OWNERS HAVE MOSTLY BEEN GETTING HIGHER RATES THAN THE LAST DONE - FEARNLEYS
Cape
There is still limited amount of positive news around, with the effects of Corona virus hurting world economy. However, overall average in ...
Thursday, 05 March 20
COAL IMPORTS DOWN IN MAJOR ASIAN MARKETS, AND CORONAVIRUS NOT THE DRIVING FORCE - CLYDE RUSSELL
Asia’s seaborne coal markets stumbled in February and it appears the coronavirus outbreak in China may dodge most of the blame, with the weak ...
Thursday, 05 March 20
SEABORNE COAL'S STRUGGLES IN ASIA ARE MORE THAN JUST CHINA CORONAVIRUS - REUTERS
Asia’s seaborne coal markets stumbled in February and it appears the coronavirus outbreak in China may dodge most of the blame, with the weak ...
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- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Sarangani Energy Corporation, Philippines
- Central Java Power - Indonesia
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- IHS Mccloskey Coal Group - USA
- Georgia Ports Authority, United States
- Aditya Birla Group - India
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- Singapore Mercantile Exchange
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Coalindo Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Goldman Sachs - Singapore
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Billiton Holdings Pty Ltd - Australia
- Carbofer General Trading SA - India
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- Tamil Nadu electricity Board
- Medco Energi Mining Internasional
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- The University of Queensland
- Madhucon Powers Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Merrill Lynch Commodities Europe
- Orica Mining Services - Indonesia
- Ministry of Mines - Canada
- Edison Trading Spa - Italy
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Australian Coal Association
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Latin American Coal - Colombia
- Vizag Seaport Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- GMR Energy Limited - India
- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Formosa Plastics Group - Taiwan
- Bhoruka Overseas - Indonesia
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maharashtra Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- Deloitte Consulting - India
- Petron Corporation, Philippines
- Energy Development Corp, Philippines
- Mjunction Services Limited - India
- Eastern Energy - Thailand
- Binh Thuan Hamico - Vietnam
- London Commodity Brokers - England
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Indian Energy Exchange, India
- CNBM International Corporation - China
- VISA Power Limited - India
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
- Eastern Coal Council - USA
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
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