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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, 18 January 20
GERMAN STEAM COAL IMPORTS IN 2019 PLUMMETED BY 17 % - COAL IMPORTERS ASSOCIATION
Press Release: According to preliminary calculations by the German Coal Importers Association (Verein der Kohlenimporteure e. V.), world trade in h ...
Saturday, 18 January 20
A 61,400 DWT FIXED FROM SOUTH EAST ASIA DELIVERY EAST KALIMANTAN REDELIVERY WEST COAST INDIA IN THE LOW $7,000S - BALTIC BRIEFING
Capesize
The market was relatively stable over this past week putting an end to the past months of more extreme declines. While the Capesize 5T ...
Friday, 17 January 20
EIA ESTIMATES THAT U.S. COAL PRODUCTION DECLINED BY 65 MMST (9%) TO 690 MMST IN 2019. IN 2020, COAL PRODUCTION WILL DECLINE BY A FURTHER 14% TO 597 MMST
U.S. Coal Supply.
EIA estimates that U.S. coal production declined by 65 million short tons (MMst) (9%) to 690 MMst in 2019. In 2020, EIA ...
Friday, 17 January 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index, a gauge of coal p ...
Thursday, 16 January 20
SUPRAMAX: INDO/CHINA ROUND VOYAGE FIXING AROUND LOW/MID USD 6,000 BSS APS INDO - FEARNLEYS
Capesize
Still very rough seas for the big ships, with the majority of the fleet trading Far East or fronthaul and consequently earning far les ...
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- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Cigading International Bulk Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Ministry of Transport, Egypt
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- Larsen & Toubro Limited - India
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- Romanian Commodities Exchange
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- Minerals Council of Australia
- Semirara Mining Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- Chettinad Cement Corporation Ltd - India
- Malabar Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Australian Coal Association
- Thai Mozambique Logistica
- New Zealand Coal & Carbon
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- MS Steel International - UAE
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Africa Commodities Group - South Africa
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- VISA Power Limited - India
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- Wilmar Investment Holdings
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Toyota Tsusho Corporation, Japan
- McConnell Dowell - Australia
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- Borneo Indobara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Ind-Barath Power Infra Limited - India
- Posco Energy - South Korea
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Siam City Cement - Thailand
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- GN Power Mariveles Coal Plant, Philippines
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- Mjunction Services Limited - India
- Samtan Co., Ltd - South Korea
- Grasim Industreis Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- Planning Commission, India
- Indogreen Group - Indonesia
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Meenaskhi Energy Private Limited - India
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- Krishnapatnam Port Company Ltd. - India
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- PTC India Limited - India
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Parry Sugars Refinery, India
- White Energy Company Limited
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Global Green Power PLC Corporation, Philippines
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- ICICI Bank Limited - India
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Indian Energy Exchange, India
- Mercuria Energy - Indonesia
- Intertek Mineral Services - Indonesia
- SMC Global Power, Philippines
- Jaiprakash Power Ventures ltd
- Karaikal Port Pvt Ltd - India
- The University of Queensland
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