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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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Wednesday, 19 February 20
AS OCEAN TEMPERATURES RISE, SHIPOWNERS LOOK FOR WAYS TO COPE - WARTSILA
The world is heating up, and its oceans are no exception. According to the International Panel on Climate Change (IPCC), the oceans absorb the majo ...
Wednesday, 19 February 20
MARKET INSIGHT - INTERMODAL
The coronavirus outbreak is estimated to negatively affect global economy by at least EUR400bn this year, representing around the 0.4% of global GD ...
Tuesday, 18 February 20
WEEKLY MARKET ANALYSIS - ALLIED
Under such poorly performing market circumstances, many usually take the historical approach, in order to better understand and further analyze the ...
Tuesday, 18 February 20
ADARO SHIPPED 27 PERCENT OF ITS TOTAL COAL PRODUCTION IN 2019 TO INDIA AND CHINA
PT Adaro Energy Tbk (AE) produced 58.03 Mt of coal from PT Adaro Indonesia (AI), Balangan Coal Companies and Adaro Me ...
Tuesday, 18 February 20
ADARO REMAINS POSITIVE ON THE LONG-TERM FUNDAMENTALS OF COAL MARKET SUPPORTED BY THE SOUTHEAST ASIA AND SOUTH ASIA REGION
The global seaborne thermal coal market in 2019 was faced with macro and industry challenges which pushed international coa ...
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- Global Business Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- The University of Queensland
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Aditya Birla Group - India
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Interocean Group of Companies - India
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- GMR Energy Limited - India
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- Binh Thuan Hamico - Vietnam
- Latin American Coal - Colombia
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Bhushan Steel Limited - India
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Ambuja Cements Ltd - India
- London Commodity Brokers - England
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Manunggal Multi Energi - Indonesia
- Coalindo Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Australian Coal Association
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sarangani Energy Corporation, Philippines
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Sical Logistics Limited - India
- Mjunction Services Limited - India
- Sindya Power Generating Company Private Ltd
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- Thai Mozambique Logistica
- Electricity Authority, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Parry Sugars Refinery, India
- Indo Tambangraya Megah - Indonesia
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Marubeni Corporation - India
- Planning Commission, India
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- Essar Steel Hazira Ltd - India
- Parliament of New Zealand
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meralco Power Generation, Philippines
- PowerSource Philippines DevCo
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- ICICI Bank Limited - India
- AsiaOL BioFuels Corp., Philippines
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- ASAPP Information Group - India
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