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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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Sunday, 22 December 19
TRADING PLACES FOR 2020 - BALTIC EXCHANGE
In the sea of 2020 predictions, Saxo Bank’s Outrageous Predictions sail their own very unique course. For nearly 20 years the Danish investme ...
Saturday, 21 December 19
SUPRAMAX: A 63,000 DWT VESSEL, OPEN CIGADING, FIXED A TRIP VIA INDONESIA, REDELIVERY WEST COAST INDIA, AT $8,500 - BALTIC BRIEFING
Capesize
The Capesize market this past week has been attempting to recalibrate itself in consideration of weakening freight levels and increasi ...
Saturday, 21 December 19
SHIPPING'S SUPPLY AND DEMAND TRENDING OFF BALANCE - BIMCO
One of the most worrying trends that has developed recently – which will affect shipping demand in the years to come – is the falling t ...
Friday, 20 December 19
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 19 December 19
COAL POWER GENERATION CONTINUES TO DECLINE IN GERMANY: DESTATIS, XINHUA REPORTED
The volume of electricity generated in coal-fired power plants in Germany decreased “markedly” by 37 percent to 34 billion kilowatt-hou ...
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- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- The State Trading Corporation of India Ltd
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Directorate General of MIneral and Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- Global Business Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Standard Chartered Bank - UAE
- European Bulk Services B.V. - Netherlands
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Ministry of Transport, Egypt
- White Energy Company Limited
- Coalindo Energy - Indonesia
- India Bulls Power Limited - India
- Parliament of New Zealand
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- LBH Netherlands Bv - Netherlands
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- Chamber of Mines of South Africa
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Petron Corporation, Philippines
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- Commonwealth Bank - Australia
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bukit Baiduri Energy - Indonesia
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Indika Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Central Electricity Authority - India
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- McConnell Dowell - Australia
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Jaiprakash Power Ventures ltd
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- SMC Global Power, Philippines
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Essar Steel Hazira Ltd - India
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Barasentosa Lestari - Indonesia
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Australian Coal Association
- Goldman Sachs - Singapore
- Baramulti Group, Indonesia
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Romanian Commodities Exchange
- GMR Energy Limited - India
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- SN Aboitiz Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- Kaltim Prima Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- Sindya Power Generating Company Private Ltd
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Bahari Cakrawala Sebuku - Indonesia
- London Commodity Brokers - England
- Kobexindo Tractors - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Iligan Light & Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
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