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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, 30 November 19
PANAMAX: LEVELS IMPROVED IN THE PACIFIC MARKET TOO WITH $11,000 BEING CONCLUDED ON AN 81,000DWT SHIP FOR AN INDONESIA TO CHINA COAL TRIP - BALTIC BRIEFING
Capesize
The market has been well supported over the past week, led primarily by the Atlantic Basin. After bottoming last week, sentiment was s ...
Friday, 29 November 19
FITCHRATINGS MAINTAINS NEGATIVE 2020 OUTLOOK ON SHIPPING, AS TIGHTER SUPPLY HELPS, BUT SOFTER DEMAND DRAGS
Fitch’s Sector Outlook: Negative
We maintain a negative sector outlook for global shipping because of the forecast slowdown of ...
Friday, 29 November 19
INDONESIA PRODUCES 390 MLN TONNES OF COAL IN JAN-SEPT: MINISTER - REUTERS
Indonesia’s production of coal for the January-September period was 390 million tonnes, Energy and Mineral Resources Minister Arifin Tasrif s ...
Wednesday, 27 November 19
SHIPPING MARKET INSIGHT - INTERMODAL
As the end of the fourth quarter is approaching, one could say that the wet market has maintained the strong pace observed during the third qu ...
Tuesday, 26 November 19
PREPARATIONS INTENSIFY AS 1 JANUARY 2020 GLOBAL CUT IN SULPHUR IN SHIP'S FUEL OIL LOOMS: IMO
“IMO 2020” requirements for ships to cut sulphur oxide emissions enter into effect in just over one month’s time. This will signi ...
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- Aditya Birla Group - India
- White Energy Company Limited
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Vizag Seaport Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
- Gujarat Sidhee Cement - India
- Sinarmas Energy and Mining - Indonesia
- Bhushan Steel Limited - India
- ICICI Bank Limited - India
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Australian Commodity Traders Exchange
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- Minerals Council of Australia
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- Marubeni Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Commonwealth Bank - Australia
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- Planning Commission, India
- Pipit Mutiara Jaya. PT, Indonesia
- Sree Jayajothi Cements Limited - India
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Kumho Petrochemical, South Korea
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
- Central Electricity Authority - India
- Makarim & Taira - Indonesia
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- Economic Council, Georgia
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- GVK Power & Infra Limited - India
- The State Trading Corporation of India Ltd
- Kapuas Tunggal Persada - Indonesia
- Standard Chartered Bank - UAE
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Singapore Mercantile Exchange
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- GMR Energy Limited - India
- Siam City Cement PLC, Thailand
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- Altura Mining Limited, Indonesia
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- VISA Power Limited - India
- Medco Energi Mining Internasional
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