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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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Thursday, 24 October 19
PANAMAX: NEGATIVE SENTIMENT IN THE MARKET AS IT CONTINUES TO WEAKEN - FEARNLEYS
Capesize
The market has continued to slide the last week, as lack of fresh requirements and a slight oversupply of tonnage heading towards Sout ...
Wednesday, 23 October 19
CHINA'S 2019 COAL IMPORTS SET TO RISE MORE THAN 10%: ANALYSTS - REUTERS
China, the world’s top coal buyer, is on track to boost imports of the fuel by more than 10% this year, traders and analysts said on Tuesday, ...
Wednesday, 23 October 19
SHIPPING MARKET INSIGHT - INTERMODAL
Moving closer to the end of the year, we are facing what the market was expecting for quite a while, the ship repair sector booming with the shipya ...
Tuesday, 22 October 19
DRY BULK: DESPITE THE DOWNWARD CORRECTION NOTED OVER THE PAST MONTH, RATES ARE STILL HOLDING OFF AT FAVORABLE LEVELS - ALLIED SHIPPING
Despite the downward correction that has been noted in the dry bulk market over the past month, rates are still holding off at favorable levels. Ev ...
Monday, 21 October 19
SHIPPERS CHANGE COURSE AS FUEL RULES TARGET SULPHUR EMISSIONS - WOOD MACKENZIE
The International Maritime Organization (IMO), the industry’s regulator, will require all ships to reduce the level of sulphur in their engin ...
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- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement PLC, Thailand
- Krishnapatnam Port Company Ltd. - India
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Parliament of New Zealand
- London Commodity Brokers - England
- Petron Corporation, Philippines
- PTC India Limited - India
- Meenaskhi Energy Private Limited - India
- Gujarat Sidhee Cement - India
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Power Finance Corporation Ltd., India
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- VISA Power Limited - India
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Indogreen Group - Indonesia
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- Videocon Industries ltd - India
- The Treasury - Australian Government
- Uttam Galva Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- Africa Commodities Group - South Africa
- Economic Council, Georgia
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Tamil Nadu electricity Board
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- ICICI Bank Limited - India
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Ministry of Transport, Egypt
- Anglo American - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- San Jose City I Power Corp, Philippines
- Aditya Birla Group - India
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Planning Commission, India
- PowerSource Philippines DevCo
- Central Electricity Authority - India
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Commonwealth Bank - Australia
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Merrill Lynch Commodities Europe
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- Renaissance Capital - South Africa
- Samtan Co., Ltd - South Korea
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- SMG Consultants - Indonesia
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
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