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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, 11 January 20
SUPRAMAX: INDONESIA COAL RUNS, A 58,000DWT SHIP WAS RUMOURED FIXED DELIVERY KALIMANTAN, REDELIVERY WEST COAST INDIA, IN THE $4,000S - BALTIC BRIEFING
Capesize
Closing out the first full trading week of 2020, the Capesize market is struggling to gain any solid positive upward traction. Opening ...
Friday, 10 January 20
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remains flat
China’s benchmark power coal price remained flat during the past week.
...
Thursday, 09 January 20
NEW IMO LIFEBOAT REQUIREMENTS ENTER INTO FORCE - STANDARD CLUB
KNOWLEDGE TO ELEVATE
Three new compulsory IMO resolutions entered into force on 1 January 2020. These resolutions deal with the maintenance, t ...
Thursday, 09 January 20
INDIA'S NEW EASED MINING RULES TO ENHANCE FOREIGN PARTICIPATION IN COAL SECTOR: MINISTER
India’s cabinet has eased mining laws in a bid to attract foreign players to the domestic coal sector and reduce imports of the fuel, coal mi ...
Thursday, 09 January 20
SUPRAMAX: A NUMBER OF INDONESIAN ROUND TRIPS WERE REPORTED AT BELLOW USD 5,000 PD LEVELS - FEARNLEYS
Capesize
The Capesize market has hit new low's in the first week of the new year, with the West Australia route being fixed at USD 6.6 being ...
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- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Latin American Coal - Colombia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- Minerals Council of Australia
- Jaiprakash Power Ventures ltd
- India Bulls Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- SMG Consultants - Indonesia
- Ambuja Cements Ltd - India
- Georgia Ports Authority, United States
- Binh Thuan Hamico - Vietnam
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- Cement Manufacturers Association - India
- Oldendorff Carriers - Singapore
- Ceylon Electricity Board - Sri Lanka
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Formosa Plastics Group - Taiwan
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Wilmar Investment Holdings
- IHS Mccloskey Coal Group - USA
- Lanco Infratech Ltd - India
- The University of Queensland
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- Energy Development Corp, Philippines
- Salva Resources Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Leighton Contractors Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- Planning Commission, India
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- Videocon Industries ltd - India
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- New Zealand Coal & Carbon
- Deloitte Consulting - India
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- South Luzon Thermal Energy Corporation
- Aditya Birla Group - India
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Australian Coal Association
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Trasteel International SA, Italy
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Transport, Egypt
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Sree Jayajothi Cements Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The State Trading Corporation of India Ltd
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Indogreen Group - Indonesia
- Sakthi Sugars Limited - India
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Independent Power Producers Association of India
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
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