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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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Saturday, 15 February 20
AFRAMAX: A MORE POSITIVE ATTITUDE EXISTED IN THIS SECTOR WITH RATES IMPROVING ON ALL ROUTES - BALTIC BRIEFING
VLCC
The market in the Middle East was unmoved this week, with Chinese refiners continuing to slow imports, allied with the impact of the Coron ...
Saturday, 15 February 20
A 56,000DWT VESSEL WAS CONCLUDED BASIS DELIVERY SINGAPORE VIA INDONESIA REDELIVERY CHINA IN THE LOW $6,000S - BALTIC BRIEFING
Capesize
Riding the downward momentum of the previous week, the market was always going to be hard pressed to make any sort of revival. With mu ...
Saturday, 15 February 20
U.S. COAL PRODUCTION WILL TOTAL 595 MMST IN 2020, DOWN 14% FROM 2019 - EIA
EIA forecasts that U.S. coal production will total 595 million short tons (MMst) in 2020, down 95 MMst (14%) from 2019.
Lower ...
Friday, 14 February 20
WHY THE WORLD ECONOMY WILL BE FACING CHINA'S CORONAVIRUS FOR A LONG TIME - CNBC
Everywhere we look we see the headlines and commentators talking about the coronavirus and its impact on tourism, trade and investment between Chin ...
Friday, 14 February 20
KOWEPO INVITED BIDS FOR 1.275 MILLION TONS OF MIN. 5,600 NCV COAL
COALspot.com: Korea Western Power Co. Ltd (KOWEPO). as a representative of five Korean Gencos has issued an international tender for total 1,275,00 ...
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- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- Australian Coal Association
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Banpu Public Company Limited - Thailand
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Ind-Barath Power Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Siam City Cement - Thailand
- Agrawal Coal Company - India
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- Energy Development Corp, Philippines
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Global Green Power PLC Corporation, Philippines
- India Bulls Power Limited - India
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Anglo American - United Kingdom
- Trasteel International SA, Italy
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Bharathi Cement Corporation - India
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jorong Barutama Greston.PT - Indonesia
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Dalmia Cement Bharat India
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- ASAPP Information Group - India
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Indika Energy - Indonesia
- Central Java Power - Indonesia
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- Borneo Indobara - Indonesia
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- Economic Council, Georgia
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
- Mercuria Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Therma Luzon, Inc, Philippines
- The University of Queensland
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Makarim & Taira - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Goldman Sachs - Singapore
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Bhushan Steel Limited - India
- Directorate Of Revenue Intelligence - India
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Minerals Council of Australia
- Siam City Cement PLC, Thailand
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- Toyota Tsusho Corporation, Japan
- Kalimantan Lumbung Energi - Indonesia
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Savvy Resources Ltd - HongKong
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