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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, 03 March 20
COAL'S SHARE OF CHINA ENERGY MIX FALLS IN 2019 BUT CONSUMPTION STILL RISING - REUTERS
Coal accounted for 57.7% of China’s primary energy consumption in 2019, the National Bureau of Statistics said on Friday, down 1.5 percentage ...
Monday, 02 March 20
SHIPOWNERS AND OPERATORS COULD FACE DETENTION OF SHIPS FROM 1ST MARCH UNDER IMO RULE - ICS
Port state control authorities will begin to enforce the IMO’s Sulphur 2020 from 1st March, making it an offense for ships to carry fuel that ...
Saturday, 29 February 20
SUPRAMAX SENTIMENT WAS UP IN A FEW KEY AREAS OVER THE LAST WEEK - BALTIC BRIEFING
Capesize
The Capesize market woes related to Coronavirus have now spread through the wider global markets like wildfire. The wider supply and d ...
Thursday, 27 February 20
FOREIGN COMPANIES LIKELY TO SKIP COMMERCIAL COAL BLOCK AUCTIONS - ECONOMIC TIMES
The Centre is in the process of inviting global players for commercial mining, following 100% foreign direct investment in the sector. However, giv ...
Wednesday, 26 February 20
SHIPPING MARKET INSIGHT - INTERMODAL
Coming from one of its busiest periods historically, with a list of scrubber and BWMS retrofits on a waiting list, the ship repair sector is witnes ...
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- Electricity Authority, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Indogreen Group - Indonesia
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Central Java Power - Indonesia
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- Attock Cement Pakistan Limited
- Coastal Gujarat Power Limited - India
- Oldendorff Carriers - Singapore
- San Jose City I Power Corp, Philippines
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- Singapore Mercantile Exchange
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Wilmar Investment Holdings
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Bhatia International Limited - India
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Mercator Lines Limited - India
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- The Treasury - Australian Government
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- McConnell Dowell - Australia
- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Metalloyd Limited - United Kingdom
- Heidelberg Cement - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Trasteel International SA, Italy
- Toyota Tsusho Corporation, Japan
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- GAC Shipping (India) Pvt Ltd
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- The University of Queensland
- Maharashtra Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- Australian Commodity Traders Exchange
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bharathi Cement Corporation - India
- PTC India Limited - India
- GMR Energy Limited - India
- Siam City Cement PLC, Thailand
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