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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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Thursday, 05 March 20
INDONESIA'S BUKIT ASAM 2019 OUTPUT RISES 10.2% Y/Y - REUTERS
PT Bukit Asam, Indonesia’s state-owned coal miner, said on Wednesday its output in 2019 rose 10.2% to 29.1 million tonnes.
Coa ...
Thursday, 05 March 20
SEEING REMOTELY - IN SAFETY: BUREAU VERITAS PERFORMS FIRST SURVEY BY DRONE - BUREAU VERITAS
Bureau Veritas Marine & Offshore (BV), a world leader in testing, inspection and certification (TIC) services has completed its first survey by ...
Wednesday, 04 March 20
AN EPIDEMIC OF UNCERTAINTY - THE CORONAVIRUS AND FORCE MAJEURE - WFW
KNOWLEDGE TO ELEVATE
Do the effects of the coronavirus give rise to legitimate force majeure claims in connection with shipbuilding contracts ...
Wednesday, 04 March 20
CHINA IMPORTED 76.8 MLN TONNES OF CRUDE OIL FOR JANUARY & FEBRUARY 2020; UP 3.4% YOY - REFINITIV | BC
The COVID-19 crisis has been gripping China already for almost two months now. It’s having a huge negative impact on the economy, and this is ...
Wednesday, 04 March 20
MARKET INSIGHT - INTERMODAL
As it was expected, the whole world has been focusing on the spread of the Coronavirus, with the fast outbreak being primarily a massive humanitari ...
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- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Maheswari Brothers Coal Limited - India
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parry Sugars Refinery, India
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- Sarangani Energy Corporation, Philippines
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- San Jose City I Power Corp, Philippines
- Mintek Dendrill Indonesia
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Malabar Cements Ltd - India
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Energy - Thailand
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- Renaissance Capital - South Africa
- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- Banpu Public Company Limited - Thailand
- Holcim Trading Pte Ltd - Singapore
- OPG Power Generation Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- CIMB Investment Bank - Malaysia
- Economic Council, Georgia
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Siam City Cement PLC, Thailand
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Bukit Baiduri Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Anglo American - United Kingdom
- Riau Bara Harum - Indonesia
- Energy Link Ltd, New Zealand
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- VISA Power Limited - India
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bhatia International Limited - India
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- The University of Queensland
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- Kepco SPC Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- Orica Australia Pty. Ltd.
- Sakthi Sugars Limited - India
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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