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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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Thursday, 12 December 19
KOWEPO INVITING BIDS FOR 2.28 MILLION TONS OF MIN.4,400 NCV COAL
COALspot.com: South Korea’s Korea Western Power Co., Ltd. (KOWEPO) has issued an international tender for total 2,280,000 tons of (Sub) Bitum ...
Wednesday, 11 December 19
PANAMAX: THE MARKET REMAINED FIRM IN THE PACIFIC, WITH INCREASED ACTIVITY NOTED IN KEY AREAS, SUCH AS INDONESIA - ALLIED
Capesize – Positive momentum was resumed this past week, with earnings mak-ing some gains once again. This rising pattern was reflected in th ...
Tuesday, 10 December 19
PREPARATIONS INTENSIFY AS IMO 2020 GLOBAL SULPHUR CAP LOOMS - STANDARD CLUB
With less than a month to go for the impending IMO 2020 global sulphur cap, the club has started witnessing dispute cases relating to the measureme ...
Monday, 09 December 19
KOREA SOUTHERN POWER CO LTD IS INVITING OFFERS FOR MIN 3700 NCV COAL
COALspot.com: South Korea’s Korea East-West Power Co. Ltd has issued an international tender for 160,000 Tons steam coal.
Acco ...
Saturday, 07 December 19
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
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- Tata Chemicals Ltd - India
- Jaiprakash Power Ventures ltd
- Posco Energy - South Korea
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Altura Mining Limited, Indonesia
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Larsen & Toubro Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- Central Java Power - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Merrill Lynch Commodities Europe
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Trasteel International SA, Italy
- Energy Link Ltd, New Zealand
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- PTC India Limited - India
- Coal and Oil Company - UAE
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Coastal Gujarat Power Limited - India
- LBH Netherlands Bv - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Economic Council, Georgia
- GVK Power & Infra Limited - India
- Gujarat Sidhee Cement - India
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- Minerals Council of Australia
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- Formosa Plastics Group - Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- Straits Asia Resources Limited - Singapore
- Maheswari Brothers Coal Limited - India
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Bukit Makmur.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- SMG Consultants - Indonesia
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Medco Energi Mining Internasional
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- PetroVietnam Power Coal Import and Supply Company
- Vizag Seaport Private Limited - India
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Baramulti Group, Indonesia
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Australian Coal Association
- Timah Investasi Mineral - Indoneisa
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- Sojitz Corporation - Japan
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