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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, 07 December 19
SOUTH AFRICAN COAL PRICE SURGE, WHILE OTHERS LANGUISH, IS TROUBLING - REUTERS
Coal prices around the world are gently sliding as demand from top importers such as China, India and even Europe remains subdued amid a so far mil ...
Saturday, 07 December 19
SUPRAMAX: OVERALL, THE BALTIC SUPRAMAX INDEX REMAINED IN POSITIVE MODE, DESPITE SOME AREAS LACKING FRESH ACTIVITY - BALTIC BRIEFING
Capesize
This week the Capesize market maintained healthy earnings, as an end of year surge took the Capesize 5TC back up to $25,202 by mid-wee ...
Friday, 06 December 19
INDONESIA COAL BENCHMARK PRICE FOR DECEMBER INCREASES BY US 3 CENTS MOM
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Thursday, 05 December 19
IMO 2020 IS ABOUT TO GET REAL - GAVIN THOMPSON
As I write this edition of the APAC Energy Buzz from my desk in Singapore I can see ships. Lots of ships. No surprise given that Singapore is among ...
Wednesday, 04 December 19
FITCH RATINGS: CASH FLOW GENERATION TO SLOW DOWN FOR INDONESIAN COAL MINERS
Fitch Ratings' negative outlook on the Indonesian coal-mining sector reflects our view of weaker cash flow generation on account of declining c ...
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- Central Java Power - Indonesia
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
- Karaikal Port Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Madhucon Powers Ltd - India
- Uttam Galva Steels Limited - India
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Edison Trading Spa - Italy
- Central Electricity Authority - India
- Anglo American - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- Merrill Lynch Commodities Europe
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Bhatia International Limited - India
- Salva Resources Pvt Ltd - India
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Sakthi Sugars Limited - India
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- Iligan Light & Power Inc, Philippines
- Deloitte Consulting - India
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- Australian Coal Association
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indika Energy - Indonesia
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Africa Commodities Group - South Africa
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- PTC India Limited - India
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Billiton Holdings Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Kapuas Tunggal Persada - Indonesia
- South Luzon Thermal Energy Corporation
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Cement Manufacturers Association - India
- Trasteel International SA, Italy
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
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