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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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Tuesday, 21 January 20
THERMAL COAL PRICES SET FOR RECOVERY THIS YEAR AS OVERSUPPLY TIGHTENS - REUTERS
Thermal coal prices are expected to recover this year after losing around a third of their value last year as demand from some south-east Asian cou ...
Monday, 20 January 20
INDIA TO STOP SUBSTITUTABLE COAL IMPORT; CAN GO FOR AUCTION OF 100 FULLY EXPLORED NEW BLOCKS: JOSHI - PTI
The Cabinet recently approved promulgation of Mineral Laws (Amendment) Ordinance 2020 to amend Mines and Minerals (Development and Regulation ) Act ...
Monday, 20 January 20
CHINA DECEMBER COAL OUTPUT UP 2.4 PERCENT ON YEAR - STATS BUREAU: REUTERS
China produced 331.74 million tonnes of coal in December, up 2.4 percent on the year, the National Bureau of Statistics said on Friday.
...
Monday, 20 January 20
CHINA IMPORTED 124.4 MLN TONNES OF COAL FROM INDONESIA IN 2019, UP 15.1 PERCENT YOY - BANCHERO COSTA
China's coal imports raced ahead in 2019, surprising many who had expected that in the months of 2019 to come the government would clamp down s ...
Saturday, 18 January 20
BIMCO: LOW-SULPHUR FUEL SALE JUMPS TO A 70% SHARE IN SINGAPORE, AS THE IMO 2020 SULPHUR CAP KICKS IN
The final quarter of 2019 marked a massive decline of HSFO sales, as the industry transitioned into compliance of the IMO 2020 Sulphur Cap (IMO2020 ...
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- Sical Logistics Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining and Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- White Energy Company Limited
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- Toyota Tsusho Corporation, Japan
- Eastern Coal Council - USA
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Binh Thuan Hamico - Vietnam
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- ASAPP Information Group - India
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Karaikal Port Pvt Ltd - India
- Bhatia International Limited - India
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- The University of Queensland
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- Formosa Plastics Group - Taiwan
- Pendopo Energi Batubara - Indonesia
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Planning Commission, India
- Rio Tinto Coal - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Borneo Indobara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Africa Commodities Group - South Africa
- Kobexindo Tractors - Indoneisa
- Lanco Infratech Ltd - India
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Sree Jayajothi Cements Limited - India
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
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