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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, 21 October 19
COAL TO PLAY SIGNIFICANT ROLE IN SOUTH AFRICA POWER MIX - MINISTER, REUTERS REPORTED
South Africa’s plans for additional power generation over the next decade will involve a variety of energy sources, with coal still playing a ...
Monday, 21 October 19
ULTRAMAX: IN ASIA, TRIPS FROM THE SINGAPORE AREA WERE PAYING BETWEEN $14,000 AND $16,000, DEPENDING ON THE VESSEL SIZE AND DURATION - BALTIC BRIEFING
Capesize
The market traded in a relatively stable supported manner in the Pacific this week while the Atlantic experienced weakening turbulence ...
Friday, 18 October 19
WHY CRUDE TANKER RATES JUST FELL (HALFWAY) BACK TO EARTH - FREIGHT WAVES
Panic drove crude-tanker rates up, very briefly, to mind-bogglingly high assessed levels of around $300,000 per day. Now, the fear factor has been ...
Friday, 18 October 19
SHORT TERM STRENGTH FOR OZ COMMODITIES - BALTIC BRIEFING
Volatility in the global commodity markets is not expected to unduly rattle Australia’s commodity outlook through 2020, but the 2021 picture ...
Friday, 18 October 19
SINGAPORE'S APEX TO LAUNCH LOW-SULFUR FUEL OIL CONTRACT AHEAD OF NEW SHIPPING RULES - REUTERS
Singapore-based Asia Pacific Exchange (APEX) will launch a low-sulfur fuel oil (LSFO) futures contract on Friday aimed at helping shipping and ener ...
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- Aboitiz Power Corporation - Philippines
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Dalmia Cement Bharat India
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Sarangani Energy Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- White Energy Company Limited
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Indogreen Group - Indonesia
- Australian Coal Association
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- The State Trading Corporation of India Ltd
- Cement Manufacturers Association - India
- Bulk Trading Sa - Switzerland
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Pendopo Energi Batubara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- Port Waratah Coal Services - Australia
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Trasteel International SA, Italy
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Coastal Gujarat Power Limited - India
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- Vedanta Resources Plc - India
- Independent Power Producers Association of India
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Semirara Mining and Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Grasim Industreis Ltd - India
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- Planning Commission, India
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Economic Council, Georgia
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- MS Steel International - UAE
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