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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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Wednesday, 20 November 19
AUSTRALIA'S NEW HOPE POSTS 66% SURGE IN Q1 SALEABLE COAL OUTPUT - REUTERS
Australian coal producer New Hope Corp Ltd reported on Tuesday a 66% jump in saleable coal production in the first quarter, as output ramped up at ...
Wednesday, 20 November 19
THE IMO AND THE PRICE OF GAS OR THE IMPACT OF THE INTERNATIONAL MARITIME ORGANISATION'S SULPHUR 2020 LIMIT FOR MARINE FUEL OIL ON THE PRICE OF GAS - KING & SPALDING
The main bunker fuel for ships is High Sulphur Fuel Oil (HSFO, with sulphur up to 3.5% m/m (mass by mass)). This will all change on 1 January 2020 ...
Wednesday, 20 November 19
SHIPPING MARKET INSIGHT - INTERMODAL
While the market expects the next OPEC meeting, there are still no clear signs indicating that the organization will keep supporting oil prices, wh ...
Monday, 18 November 19
CHINA RECORDS STABLE COAL PRODUCTION IN JAN-OCT: XINHUA
China’s raw coal output registered stable growth in the first 10 months, while its imports remained robust, official data showed.
...
Monday, 18 November 19
SUPRAMAX: IN THE INDONESIAN COAL BUSINESS, A 58KDWT VESSEL FIXED DELIVERY PHILIPPINES, REDELIVERY INDIA AT CLOSE TO $8,000 - BALTIC BRIEFING
Capesize
For most of the week the rates were nudging up under a flurry of activity in the Pacific as levels for the West Australia to China C5 ...
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- Chettinad Cement Corporation Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- PNOC Exploration Corporation - Philippines
- Dalmia Cement Bharat India
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Medco Energi Mining Internasional
- London Commodity Brokers - England
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- The University of Queensland
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Manunggal Multi Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Parliament of New Zealand
- Singapore Mercantile Exchange
- Economic Council, Georgia
- Borneo Indobara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Barasentosa Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- Marubeni Corporation - India
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- Uttam Galva Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- VISA Power Limited - India
- ASAPP Information Group - India
- Essar Steel Hazira Ltd - India
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Sical Logistics Limited - India
- AsiaOL BioFuels Corp., Philippines
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Sree Jayajothi Cements Limited - India
- International Coal Ventures Pvt Ltd - India
- Edison Trading Spa - Italy
- Coastal Gujarat Power Limited - India
- Georgia Ports Authority, United States
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- Ambuja Cements Ltd - India
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhushan Steel Limited - India
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