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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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Monday, 04 November 19
PANAMAX: WEAKER SENTIMENTS CONTINUED FROM LAST WEEK, WITH RATES FURTHER SOFTENING IN BOTH BASINS - BALTIC BRIEFING
Capesize
The Capesize market meandered slightly upwards this week before giving back much of its gains mid-week. Opening the week at $24,945, t ...
Thursday, 31 October 19
U.S. COAL-FIRED POWER PLANTS SCHEDULED TO SHUT - REUTERS
U.S. power companies expect to retire or convert from coal to gas over 13,800 megawatts (MW) of coal-fired plants in 2019 after shutting over 13,30 ...
Thursday, 31 October 19
SE ASIA MAY BECOME NET FOSSIL FUEL IMPORTER IN COMING YEARS - IEA
Southeast Asia is set to become a key driver of world energy trends over the next 20 years as its energy demand grows at twice the global average, ...
Monday, 28 October 19
ULTRAMAX: ASIA RATES REMAINED UNDER PRESSURE WITH THE NORTH LACKING FRESH ENQUIRY - BALTIC BRIEFING
Capesize
The end of the week brought about a small increase in sentiment heading into a long weekend for some regions. After sustaining a drop ...
Thursday, 24 October 19
AUSTRALIA'S HOPES TO EXPAND COAL EXPORTS IN SOUTH-EAST ASIA 'DELUSIONAL', EXPERTS SAY - THE GUARDIAN
The number of new coal-fired power plants starting construction across south-east Asia has fallen markedly over the past two years as Australia has ...
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- Larsen & Toubro Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- MS Steel International - UAE
- Energy Development Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Central Java Power - Indonesia
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- Kohat Cement Company Ltd. - Pakistan
- LBH Netherlands Bv - Netherlands
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Minerals Council of Australia
- Commonwealth Bank - Australia
- Australian Coal Association
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Madhucon Powers Ltd - India
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- Toyota Tsusho Corporation, Japan
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- Romanian Commodities Exchange
- Directorate Of Revenue Intelligence - India
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- Salva Resources Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Vedanta Resources Plc - India
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- White Energy Company Limited
- Deloitte Consulting - India
- Parliament of New Zealand
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Indogreen Group - Indonesia
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- Borneo Indobara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- Agrawal Coal Company - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Sical Logistics Limited - India
- TeaM Sual Corporation - Philippines
- Carbofer General Trading SA - India
- Star Paper Mills Limited - India
- Mercator Lines Limited - India
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- The University of Queensland
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Binh Thuan Hamico - Vietnam
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Indo Tambangraya Megah - Indonesia
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- Goldman Sachs - Singapore
- Orica Australia Pty. Ltd.
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