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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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Sunday, 23 February 20
SHIPPING INDUSTRY FACES $370 MILLION HIT FROM NEW PANAMA CANAL CHARGE - REUTERS
A new “freshwater” charge that came in this month to help the Panama Canal cope with climate change will cost the shipping industry up ...
Sunday, 23 February 20
A 57,000DWT SHIP FIXING DELIVERY SOUTH KALIMANTAN TRIP, REDELIVERY CJK, AT $7,600 - BALTIC BRIEFING
Capesize
The Capesize market found little to cheer about this week as it again endured remarkable lows. The Atlantic continued to improve, with ...
Saturday, 22 February 20
THE SURPRISING MOVE IN MARINE FUEL SPREADS - ING
Middle distillates tank
One of the biggest surprises since the implementation of new International Maritime Organization (IMO) sulphur regulati ...
Friday, 21 February 20
CAPE: AVERAGE NOMINAL DAILY EARNINGS STILL ADMITTEDLY UNCHANGED W-O-W AT BELOW US$3000 - FEARNLEYS
CAPE
The worst may just about be over for the big ships. Average nominal daily earnings still admittedly unchanged w-o-w at below US$3k, but sent ...
Friday, 21 February 20
INDIA: POTENTIAL INVESTORS SEEK MORE CLARITY ON COMMERCIAL COAL MINING NORMS - FINANCIAL EXPRESS
Potential private investors have sought more clarity on the pricing mechanism proposed for the much-anticipated auction for commercial coal mining. ...
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- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Dalmia Cement Bharat India
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- SMG Consultants - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- ICICI Bank Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- Baramulti Group, Indonesia
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Price Waterhouse Coopers - Russia
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Deloitte Consulting - India
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- International Coal Ventures Pvt Ltd - India
- Commonwealth Bank - Australia
- Miang Besar Coal Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- Samtan Co., Ltd - South Korea
- The University of Queensland
- White Energy Company Limited
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- Coalindo Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- Anglo American - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- McConnell Dowell - Australia
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- AsiaOL BioFuels Corp., Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Bangladesh Power Developement Board
- Minerals Council of Australia
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Ceylon Electricity Board - Sri Lanka
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- CIMB Investment Bank - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SN Aboitiz Power Inc, Philippines
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- India Bulls Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
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