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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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Friday, 22 November 19
UNCERTAINTY IN THERMAL COAL MARKET PERSISTED IN 3Q19 - ADARO
Uncertainty in thermal coal market persisted in 3Q19, mainly due to the actions, or inactions, of China in setting policies for global coal market. ...
Friday, 22 November 19
CIL TO DEVELOP 55 NEW COAL MINES IN NEXT 5 YEARS: COAL MINISTER
State-owned CIL will develop 55 new coal mines and expand 193 existing ones in the next five years, Parliament was informed. The company is also un ...
Thursday, 21 November 19
4TH DEEP OFFSHORE WEST AFRICA CONGRESS 2020
4th Deep Offshore West Africa Congress 2020
17 Janaury 2020
Accra, Ghana
Press Release: Following the great succ ...
Thursday, 21 November 19
INDONESIA PLANS TO KEEP $70/T COAL PRICE CAP FOR PLN, DMO - REUTERS
Indonesia’s energy minister Arifin Tasrif said his ministry plans to maintain a price cap on coal being sold to state electricity utility, PT ...
Wednesday, 20 November 19
FOREIGN DIRECT INVESTMENTS IN COMMERCIAL COAL MINING IN INDIA? - DIPESH DIPU
In August 2019, Government of India announced its approval for Foreign Direct Investment (FDI) for coal mining, processing and sale. Not that FDI i ...
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- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Global Coal Blending Company Limited - Australia
- Bhoruka Overseas - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- Interocean Group of Companies - India
- Kohat Cement Company Ltd. - Pakistan
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Bhatia International Limited - India
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Planning Commission, India
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- CNBM International Corporation - China
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- Orica Australia Pty. Ltd.
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Makarim & Taira - Indonesia
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Economic Council, Georgia
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- Medco Energi Mining Internasional
- Parliament of New Zealand
- Heidelberg Cement - Germany
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- OPG Power Generation Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Rashtriya Ispat Nigam Limited - India
- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Central Java Power - Indonesia
- Independent Power Producers Association of India
- PTC India Limited - India
- Baramulti Group, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Formosa Plastics Group - Taiwan
- MS Steel International - UAE
- Star Paper Mills Limited - India
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Jaiprakash Power Ventures ltd
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Marubeni Corporation - India
- Aditya Birla Group - India
- Binh Thuan Hamico - Vietnam
- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
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