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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, 05 February 20
CORONAVIRUS AND THE SHIPPING INDUSTRY - WATSON, FARLEY & WILLIAMS
The continued spread of Coronavirus and governmental measures to minimise the impact is likely to affect the shipping industry and supply chain.
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Wednesday, 05 February 20
INDONESIA'S COAL PRICE REFERENCE UP 1.46% IN FEBRUARY
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Wednesday, 05 February 20
MARKET INSIGHT - INTERMODAL
The oil and gas industry benefitted from a strong and solid ground in the previous year. We witnessed a slow but steady increase in bunker’s ...
Wednesday, 05 February 20
RUSSIA EXPORTED 28.6 MLN TONNES OF LNG IN 2019 - REFINITIV
A lot of attention has been paid recently on the surge in LNG exports from the United States. However, another country which is seeing truly expone ...
Tuesday, 04 February 20
CAPE: THE AVERAGE EARNINGS PER DAY FELL BENEATH THE USD 4,000, A LEVEL CONSIDERABLY BELOW EVEN THE MOST CONSERVATIVE OPEX LEVELS - ALLIED
The recent slump in the dry bulk freight market may well have been expected to some degree, but despite this the shock was still overwhelming when ...
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- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- Thiess Contractors Indonesia
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- McConnell Dowell - Australia
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Ministry of Transport, Egypt
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Bahari Cakrawala Sebuku - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- Global Green Power PLC Corporation, Philippines
- Africa Commodities Group - South Africa
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- The State Trading Corporation of India Ltd
- Anglo American - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Global Business Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Eastern Energy - Thailand
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- Wilmar Investment Holdings
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Sojitz Corporation - Japan
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- The University of Queensland
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- CIMB Investment Bank - Malaysia
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- ICICI Bank Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Makarim & Taira - Indonesia
- Bhatia International Limited - India
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
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