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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, 07 January 20
BHP EYES INDIA FOR COAL GROWTH AS CHINA DEMAND FLATLINES - SYDNEY MORNING HERALD
Australia’s largest miner, BHP, believes the long-term trajectory of the emerging economy of India and the acceleration of its steelmaking ou ...
Sunday, 05 January 20
BUNKER QUALITY CLAIMS IN 2020 - ISSUES TO CONSIDER - CLYDE&CO
KNOWLEDGE TO ELEVATE
In recent years the shipping industry has faced a significant number of bunker quality claims, most notably ari ...
Saturday, 04 January 20
SUPRAMAX: A 53,000DWT VESSEL FIXING DELIVERY INDONESIA TRIP TO CHINA AT $4,000 AND A 58,000DWT SHIP FIXING DELIVERY EAST KALIMANTAN TRIP TO THAILAND AT $5,500 - BALTIC BRIEFING
Capesize
The New Year started with an erosion on pre-Christmas rates as the higher low sulphur fuel costs due to IMO 2020 affected levels. From ...
Thursday, 02 January 20
DMO 2020 PRICE SET FOR ELECTRICITY SECTOR - IAN WOLLFF
On the 26th December 2019, the Minister of Energy and Mineral Resources (ESDM) issued the decree No. 261.K/30.MEM/2019 about the States needs for c ...
Thursday, 02 January 20
SULPHUR 2020 COMPENDIUM - HOW ARE INDIVIDUAL PORT STATES EXPECTED TO REACT? - STANDARD CLUB
KNOWLEDGE TO ELEVATE
With the new sulphur limits soon to be in force, Standard Club has been investigating the ways in which certain jurisdict ...
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- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Coastal Gujarat Power Limited - India
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- SMG Consultants - Indonesia
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- Sical Logistics Limited - India
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Minerals Council of Australia
- Energy Development Corp, Philippines
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Deloitte Consulting - India
- Ministry of Mines - Canada
- White Energy Company Limited
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Kalimantan Lumbung Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Thiess Contractors Indonesia
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Singapore Mercantile Exchange
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Essar Steel Hazira Ltd - India
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Tamil Nadu electricity Board
- Indian Oil Corporation Limited
- Energy Link Ltd, New Zealand
- ASAPP Information Group - India
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- London Commodity Brokers - England
- Semirara Mining Corp, Philippines
- VISA Power Limited - India
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- GMR Energy Limited - India
- Larsen & Toubro Limited - India
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- Mercuria Energy - Indonesia
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Oldendorff Carriers - Singapore
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Renaissance Capital - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- New Zealand Coal & Carbon
- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Bhatia International Limited - India
- Uttam Galva Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Commonwealth Bank - Australia
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- TeaM Sual Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- South Luzon Thermal Energy Corporation
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
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