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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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Thursday, 30 January 20
CAPE: WITH CHINESE NEW YEAR TAKING PLACE, THE RATES ARE REACHING FURTHER DISAPPOINTING LEVELS - FEARNLEYS
Cape
With Chinese New Year taking place, the rates are reaching further disappointing levels. Present TC average is below USD 4,500, off 24% fr ...
Wednesday, 29 January 20
INDONESIA REMAINS AT THE TOP SPOT IN 2019 AS THE LARGEST SUPPLIER OF COAL TO INDIA WITH 91.3 MLN TONNES - BANCHERO COSTA
Despite repeated promises from India’s government to reduce the country’s coal imports and increase domestic self-reliance, volumes jus ...
Wednesday, 29 January 20
MARKET INSIGHT - INTERMODAL
Last week Libya’s oil production operations were disrupted as it was reported that local Libyan tribes interrupted output at the the El Feel ...
Tuesday, 28 January 20
INDONESIA - UNCERTAINTY OVER AVAILABILITY OF LSFO - THE STANDARD CLUB
The club has received reports that low sulphur fuel is not currently readily available in all Indonesian ports and that there are local shortages.
...
Sunday, 26 January 20
SUPRAMAX: THE ASIAN BASIN SAW A 56,000DWT SHIP FIXING DELIVERY SAMARINDA TRIP TO WEST COAST INDIA AT $4,750 - BALTIC BRIEFING
Capesize
The market endured heavy losses throughout the past week, with the Capesize 5TC dropping from $8,352 to $4,772. In the lead up to Chin ...
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- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- India Bulls Power Limited - India
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- Aditya Birla Group - India
- GMR Energy Limited - India
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Georgia Ports Authority, United States
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Thai Mozambique Logistica
- Electricity Authority, New Zealand
- Parliament of New Zealand
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- Wood Mackenzie - Singapore
- Rashtriya Ispat Nigam Limited - India
- GAC Shipping (India) Pvt Ltd
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- Eastern Energy - Thailand
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Bulk Trading Sa - Switzerland
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Larsen & Toubro Limited - India
- Therma Luzon, Inc, Philippines
- Savvy Resources Ltd - HongKong
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- Altura Mining Limited, Indonesia
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Planning Commission, India
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Metalloyd Limited - United Kingdom
- Kumho Petrochemical, South Korea
- Thiess Contractors Indonesia
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- Lanco Infratech Ltd - India
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Energy Link Ltd, New Zealand
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- Coastal Gujarat Power Limited - India
- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Heidelberg Cement - Germany
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Uttam Galva Steels Limited - India
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Mercator Lines Limited - India
- CNBM International Corporation - China
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
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