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Wednesday, 10 June 20
OPEC+ CUTS EXTENSION TO ACCELERATE MARKET REBALANCING - FITCH RATINGS
 Fitch Ratings-London-08 June 2020: The OPEC+ agreement to extend by one month record oil production cuts should accelerate market rebalancing, Fitch Ratings says. This is further supported by a commitment to improve compliance from those countries that were unable to reach full conformity with the cuts.
The OPEC+ countries have made radical production cuts in the stress scenario, but it may be more difficult to reach a consensus when the worst of the crisis is over. And it is unclear whether the recovery in oil prices to date is sustainable. Furthermore, demand and production in non-OPEC+ countries, notably the US, will continue to have a significant impact on the supply-demand balance and prices. We believe that a normalisation of oil inventory built up in 1H20 will take at least several months.
Crude oil prices rose significantly in May and continued to improve in early June, because the surplus has been reduced materially. A price differential between the physical and financial markets has disappeared, pointing to crude oil market tightening. We believe that a stress case scenario with prices falling significantly below USD30/bbl is now less likely. The market is likely to experience a production deficit in 2H20 due to gradually improving demand and reduced supply.
The OPEC+ cuts were the major contributor to market rebalancing. We estimate that the OPEC+ countries reduced production by around 7.5mmbpd in May compared to March. The cumulative OPEC+ cuts should exceed 9mmbpd in June as Saudi Arabia, Kuwait and UAE have committed to cut an additional 1.1mmbpd, while Iraq and Nigeria, which underperformed in May, have promised to improve compliance in June. A resumption of production in Libya, which is not subject to the OPEC+ deal, may increase supply but should be more than offset by additional cuts elsewhere.
Furthermore, production fell in the US as a result both of shut-ins and reduced drilling activity by almost 2mmbpd at end-May compared to March, while Canada cut around 1mmbpd. The number of active drilling rigs in the US declined by 64% compared to the beginning of the year. Production in North America may continue to shrink for a while, but the pace is likely to decelerate due to increased prices. We believe that at USD30/bbl, many producers should be able to stabilise production, while at USD40/bbl or above some would be tempted to increase output, which could limit price recovery.
Estimates suggest crude oil demand increased in May compared to April, and we believe it will improve further from June due to the gradual lifting of lockdown restrictions. Implied oil products consumption in the US improved from a 28% drop in April yoy to a 20% drop in May, driven mainly by increased gasoline consumption (a yoy decline of 25% in May compared to a 44% decline in April), while the consumption of jet fuel remained flat. We believe consumption patterns are similar in Europe, while demand in China bottomed out in February.
Demand recovery is now key in achieving balance in the oil market. It could be undermined in the event of a second coronavirus wave and the re-introduction of lockdowns, although it is not our base case. While consumption of gasoline and diesel could recover by the year-end, jet fuel may lag behind as international travel restrictions may remain in place and demand for business travel may be structurally impaired.
Our ratings are informed by companies’ projected performance at end-2021, rather than in 2020, provided their liquidity is adequate, as we rate “through the cycle”. While we may recalibrate our near-term oil price assumptions to the pace of market rebalancing, our ratings already assume that the market will recover gradually; therefore the most recent improvements will not prompt portfolio-wide rating actions.
Source: Fitch Ratings
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Friday, 29 May 20
DRY BULK SHIPPING: NO QUICK RECOVERY FOR THE DRY BULK MARKET AS COVID-19 DIGS DEEPER
The outlook is poor for dry bulk, as the negative demand shock and overcapacity come together to send rates to multi-year lows, even a return to wo ...
Thursday, 28 May 20
COVID-19: A FORCE MAJEURE EVENT? - KYPRIANOU
KNOWLEDGE TO ELEVATE
While seeing the unexpected COVID-19 outbreak expanding worldwide and the first cases being identified in Cyprus, the com ...
Thursday, 28 May 20
OIL DEMAND RECOVERED BY 20% IN MAY AGAINST APRIL: RUSSIAN ENERGY MINISTER - TASS
Oil demand remains at a low level but the demand in May increased by 20% against April, Russian Energy Minister Alexander Novak said, cited by the ...
Thursday, 28 May 20
MARKET INSIGHT - INTERMODAL
Earlier in May, China’s top leaders convened for the annual National People's Congress, following over two months of delays due to the co ...
Wednesday, 27 May 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.94 PCT - XINHUA
China Taiyuan coal transaction price index stood at 125.03 points Monday, up 0.94 percent week on week.
The index, released by China ...
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- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- Independent Power Producers Association of India
- Larsen & Toubro Limited - India
- Dalmia Cement Bharat India
- Kideco Jaya Agung - Indonesia
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- Australian Coal Association
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bahari Cakrawala Sebuku - Indonesia
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- Romanian Commodities Exchange
- GN Power Mariveles Coal Plant, Philippines
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Holcim Trading Pte Ltd - Singapore
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Antam Resourcindo - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Merrill Lynch Commodities Europe
- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Heidelberg Cement - Germany
- Trasteel International SA, Italy
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Toyota Tsusho Corporation, Japan
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- Bhushan Steel Limited - India
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Economic Council, Georgia
- Indian Oil Corporation Limited
- Renaissance Capital - South Africa
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- VISA Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Tata Chemicals Ltd - India
- Essar Steel Hazira Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- Georgia Ports Authority, United States
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- SN Aboitiz Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Kartika Selabumi Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- Gujarat Sidhee Cement - India
- Directorate General of MIneral and Coal - Indonesia
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Semirara Mining Corp, Philippines
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- SMC Global Power, Philippines
- Eastern Energy - Thailand
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