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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, 13 November 19
SHIPPING MARKET INSIGHT - INTERMODAL
The improvements seen in the dry bulk market during the unexpectedly strong Q3 brought enthusiasm and optimism for a last quarter rally. Indeed as ...
Tuesday, 12 November 19
COAL IMPORTS AT MAJOR PORTS SLIP 18 PC TO 51 MT IN APRIL-OCTOBER - ECONOMIC TIMES
The Indian Ports Association (IPA), which maintains cargo data handled by these 12 ports, in its recent report, said "percentage variation fro ...
Monday, 11 November 19
EMINENT MARITIME ORGANIZATIONS AND INDIVIDUALS WERE HONORED
SHIPTEK 2019 Anchors in Greece for its 12th edition.
Eminent Maritime Organizations and Individuals were honored
Greec ...
Wednesday, 06 November 19
SHIPPING MARKET INSIGHT - INTERMODAL
With less than two months before the end of the year, the shipping and refining industries have already taken measures and invested to accommodate ...
Monday, 04 November 19
COAL INDIA'S OCTOBER PRODUCTION MAY FALL 20% - PTI
Coal India’s production in October is likely to be 19-20 per cent lower at about 40 million tonne, as compared to 49.77 million tonne produce ...
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- Asmin Koalindo Tuhup - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Vedanta Resources Plc - India
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- SN Aboitiz Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Central Java Power - Indonesia
- PTC India Limited - India
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- SMG Consultants - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- Eastern Coal Council - USA
- Global Green Power PLC Corporation, Philippines
- Makarim & Taira - Indonesia
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Malabar Cements Ltd - India
- GVK Power & Infra Limited - India
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- Xindia Steels Limited - India
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- Aboitiz Power Corporation - Philippines
- Indian Oil Corporation Limited
- Oldendorff Carriers - Singapore
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- CNBM International Corporation - China
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- Electricity Generating Authority of Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Gujarat Sidhee Cement - India
- Billiton Holdings Pty Ltd - Australia
- The University of Queensland
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- GMR Energy Limited - India
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Essar Steel Hazira Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Chettinad Cement Corporation Ltd - India
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- Thai Mozambique Logistica
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- White Energy Company Limited
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- MS Steel International - UAE
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Deloitte Consulting - India
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
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