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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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Monday, 03 February 20
KOWEPO INVITING BIDS FOR 2.46 MILLION TONS OF MIN.5700 AND MIN.5600 NCV COAL
COALspot.com: South Korea’s Korea Western Power Co., Ltd. (KOWEPO) has issued an international tender for total 2,460,000 tons of (Sub) Bitum ...
Sunday, 02 February 20
NOVEL CORONAVIRUS OUTBREAK IN CHINA - STANDARD CLUB
Members will be aware of the recent novel coronavirus outbreak in China, which has now been declared a global emergency by the World Health Organis ...
Sunday, 02 February 20
SUPRAMAX: A 52,000DWT SHIP WAS FIXED BASIS DELIVERY SOUTH KALIMANTAN TRIP TO INDIA, AT $6,000 - BALTIC BRIEFING
Capesize
The week proved conspicuous for all the wrong reasons. This was the week when the Baltic Capesize Index (BCI) turned negative, closing ...
Saturday, 01 February 20
50 MILLION PEOPLE QUARANTINED IN CHINA TO CONTAIN SPREAD OF CORONAVIRUS - HOW DOES IT AFFECT SHIPPING? - BIMCO
The outbreak of the novel coronavirus, declared a global health emergency by the WHO, has caused massive uncertainty across the global markets with ...
Saturday, 01 February 20
THERMAL COAL MARKETS: 5 TRENDS TO WATCH OUT FOR IN 2020 - MINING REVIEW
The seaborne thermal coal market entered the year challenged by low priced LNG in the Atlantic and rapidly increasing supply in the Pacific.
&n ...
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- Global Green Power PLC Corporation, Philippines
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Trasteel International SA, Italy
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Larsen & Toubro Limited - India
- Wood Mackenzie - Singapore
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- The University of Queensland
- Wilmar Investment Holdings
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- Ambuja Cements Ltd - India
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- Cement Manufacturers Association - India
- Uttam Galva Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Sree Jayajothi Cements Limited - India
- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Carbofer General Trading SA - India
- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- Indian Oil Corporation Limited
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Australian Coal Association
- Lanco Infratech Ltd - India
- Petron Corporation, Philippines
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- MS Steel International - UAE
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Energy Link Ltd, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- Xindia Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Mjunction Services Limited - India
- Bhushan Steel Limited - India
- Billiton Holdings Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Romanian Commodities Exchange
- Bulk Trading Sa - Switzerland
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- IEA Clean Coal Centre - UK
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- GAC Shipping (India) Pvt Ltd
- Malabar Cements Ltd - India
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- Anglo American - United Kingdom
- Parliament of New Zealand
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
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