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Friday, 17 April 20
OPEC BRACES FOR OIL MARKET'S "HISTORIC SHOCK"
 OPEC released its much anticipated April monthly report.
Crude Oil Price Movements
Crude oil prices collapsed in March 2020, recording their deepest monthly drop since the global financial crisis in 2008. The ramifications of the COVID-19 pandemic were the main driving force, resulting in unprecedented worldwide oil demand shock and massive sell-offs in the global oil markets, amid a significant crude surplus. The OPEC Reference Basket (ORB) value was down by $21.61, or 38.9%, m-o-m, to stand at $33.92/b, the lowest monthly value since September 2003. ICE Brent declined by $21.75, or 39.2%, m-o-m, to average $33.73/b, while NYMEX WTI fell $20.09, or 39.8%, to average $30.45/b. The term structure of all three crude benchmarks – ICE Brent, NYMEX WTI and DME Oman – moved to a super contango in March, and money managers cut speculative net long positions.
World Economy
The world economy is forecast to face a severe recession in 2020, declining by 1.5%, following global economic growth of 2.9% in the previous year. Following tender signs of improvement at the beginning of the year, expectations for global economic growth were quickly burdened by the strong impact of the COVID-19 pandemic. Within the OECD, the US is forecast to contract by 4.1% in 2020, following growth of 2.3% in 2019. An even larger decline is expected in the Euro-zone, where economic activity is forecast to fall by 6.0% in 2020, compared to growth of 1.2% in 2019. Japan is forecast to contract by 3.9% in 2020, comparing to growth of 0.7% in 2019. China’s 2020 GDP is forecast to grow by 1.5%, recovering from a sharp contraction in 1Q20 and following growth of 6.1% in 2019. India is forecast to grow by only 2.0%, a sharp slowdown from already weakening growth of 5.3% in 2019. Brazil’s economy is forecast to contract by 2.4% in 2020, following growth of 1.0% in 2019. Russia’s economy is forecast to contract by 0.5% in 2020, after growth of 1.4% in 2019, not only due to COVID-19, but also because of the considerable decline in oil prices. As risk remains to be skewed to the downside, further revisions may be warranted going forward.
World Oil Demand
World oil demand growth forecast for 2019 is kept unchanged at 0.83 mb/d, compared with the previous month’s assessment. For 2020, the world oil demand growth forecast is revised lower by 6.9 mb/d, to a historical drop of around 6.8 mb/d. The contraction in the 2Q of this year is expected to be around 12 mb/d, with April witnessing the worst contraction at about 20 mb/d. The impact of the COVID-19 outbreak in China in 1Q20, and its negative impact on transportation and industrial fuels in the country, has since spread globally and is now affecting oil demand growth in most other countries and regions, with an unprecedented impact on global oil demand, transportation fuels in particular. As a result, OECD oil demand is revised lower by 3.7 mb/d to decline by 4.0 mb/d, while non-OECD oil demand growth is adjusted lower by 3.2 mb/d to contract by 2.9 mb/d for the year. Considering latest developments, and the large uncertainties going forward, downward risks remain significant, suggesting possibility of further adjustments, especially in the 2Q, should new data and further developments warrant revisions.
World Oil Supply Non-OPEC oil supply growth in 2019 is revised down by 0.01 mb/d from the previous month’s assessment and is now estimated at 1.98 mb/d. For 2020, non-OPEC oil supply is forecast to decline by 1.50 mb/d, a downward revision of 3.26 mb/d from the previous projection. The impact of COVID-19, ensuing global economic recession and oil demand shock, will also lead to supply disruptions. Benchmark oil prices plunge prompted companies to respond by cutting capital expenditure to the lowest in 13 years. The 2020 oil supply growth forecast for the US was revised down by 1.05 mb/d to show a decline of 0.15 mb/d y-o-y. The supply growth for the 10 non-OPEC countries participating in the Declaration of Cooperation has also been adjusted lower. Oil supply in 2020 is now forecast to show growth only in Norway, Brazil, Guyana and Australia. OPEC NGLs production in 2019 is estimated to have grown by 0.04 mb/d to average 4.79 mb/d and for 2020 will grow by 0.04 mb/d to average 4.83 mb/d. In March, OPEC crude oil production increased by 821 tb/d m-o-m to average 28.61 mb/d, according to secondary sources.
Product Markets and Refining Operations
Global refinery margins globally showed mixed performance during March. In the US, margins weakened as strength in gasoil/diesel was offset by losses in gasoline cracks, as complex margins came close to negative territory. In Europe, product markets strengthened slightly at the middle of the barrel, supported by a fall in feedstock prices. An already relatively tight global gasoil market saw support from output cuts and continued critical industrial activities for essential services and goods amid COVID-19. However, in Asia, margins eased towards the end of the month, pressured by a weaker top of the barrel, despite healthy gasoil and fuel oil crack spreads.
Tanker Market
The tanker market has been one of few segments of the oil industry that enjoyed positive momentum in March. A sudden surge in crude exports boosted demand for VLCCs, which pulled up Suezmax rates as well. Dirty spot freight rates declined mid-month before climbing again as the market was supported by high demand for tankers as charterers rushed to place cargoes amid a collapse in demand due to the COVID-19 pandemic. Increased options for time-chartering, including for floating storage, underscored the build-up of excess supply of crude and products in the market. For the month, dirty spot rates averaged 69% higher m-o-m in March. Clean tanker spot freight rates rose 12% m-o-m, as the need to find homes for excess product supplies supported the market.
Trade
Crude and product trade flows have been notably affected by the COVID-19 pandemic and the uncertain outlook going forward, although there has been some lag in how the various regions have been affected. US crude exports had a strong start to the year, averaging 3.5 mb/d in 1Q20, a gain of 0.8 mb/d over the same quarter last year, as the US remained a net liquids exporter for the seventh-consecutive month. Meanwhile, China’s crude imports averaged 10.5 mb/d over the first two months of 2020, declining from December as disruptions caused by COVID-19 led to some imports being diverted or delayed. Product trade was also affected, with imports and exports averaging 0.3 mb/d lower in the first two months of the year compared to December. Official data showed India’s crude imports increasing slightly in February, although some estimates show a higher jump as the country took in some discounted cargoes diverted from China. India’s crude and product trade is likely to be broadly impacted in March by a government-ordered lockdown.
Stock Movements
OECD commercial oil stocks rose by 5.6 mb, m-o-m, in February to stand at 2,945 mb. This was 64.3 mb higher than the same time one year ago and 24.7 mb above the latest five-year average. Within components, crude stocks fell by 6.1 mb, while product stocks rose by 11.7 mb, m-o-m. In terms of days of forward cover, OECD commercial stocks rose by 5.0 days, m-o-m, in February to stand at 72.7 days. This was 11.5 days above the same period in 2019, and 10.3 days above the latest five-year average. Preliminary data for March showed that US total commercial oil stocks increased by 8.2 mb, m-o-m, to stand at 1,922 mb. This was 31.8 mb, or 1.7%, above the same period a year ago, and 16.2 mb, or 0.8%, lower than the latest five-year average. Within components, crude stocks rose by 25.1 mb, while product stocks fell by 16.8 mb, m-o-m.
Balance of Supply and Demand
Demand for OPEC crude in 2019 stood at 29.9 mb/d, 1.2 mb/d lower than the 2018 level. Following the recent agreement reached at the extraordinary OPEC and non-OPEC Ministerial Meetings, the demand for OPEC crude in 2020 is expected at 24.5 mb/d, around 5.4 mb/d lower than the 2019 level, though this remains heavily subject to uncertainty surrounding current market conditions.
Source: OPEC
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Tuesday, 17 March 20
IT IS NOW UNQUESTIONABLE THAT 2020 WILL BE A MILESTONE YEAR FOR THE OIL MARKET, AS WELL AS THE WHOLE GLOBAL ECONOMY - ALLIED
It is now unquestionable that 2020 will be a milestone year for the oil market, as well as the whole global economy. The impact from the COVID-19 o ...
Tuesday, 17 March 20
PRELIMINARY FIELD EXPERIENCES ON THE EFFECTS OF LSFO AND VLSFO ON CYLINDER CONDITION - HANS JENSEN LUBRICATORS
It is now more than two months since the 0.5% sulphur cap entered into force, which have affected the operation of more than 70,000 vessels. As ant ...
Monday, 16 March 20
ULTRAMAX: S8 INDONESIA-INDIA AND S10 INDONESIA-CHINA ROUTES BOTH POSTED GAINS OF $1,412, AND $1,289 ON THE WEEK, TO CLOSE AT $5,575, AND $6,089 RESPECTIVELY - BALTIC BRIEFING
Capesize
The Capesize market came to work on Monday, with little expectation, or confidence, that the days ahead were going to bring anything o ...
Sunday, 15 March 20
CAPTIVE COAL OUTPUT RISES 19% IN APRIL-FEBRUARY - FINANCIAL EXPRESS
Coal production from captive mines in the first eleven months of the ongoing fiscal have increased by 18.8% year-on-year (y-o-y) to 51.7 million to ...
Friday, 13 March 20
PANAMAX: SLIGHTLY STRONGER NUMBERS IN BOTH BASINS THIS WEEK - FEARNLEYS
Cape
Still very sad times for the big ships, and merit in further trading at present levels is highly debatable for most tonnage. Spot fixtures ...
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
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- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- McConnell Dowell - Australia
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- GVK Power & Infra Limited - India
- White Energy Company Limited
- Indonesian Coal Mining Association
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- Mercator Lines Limited - India
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Planning Commission, India
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Singapore Mercantile Exchange
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- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- SMC Global Power, Philippines
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Medco Energi Mining Internasional
- The State Trading Corporation of India Ltd
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- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
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- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Vedanta Resources Plc - India
- OPG Power Generation Pvt Ltd - India
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- Mintek Dendrill Indonesia
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- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
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- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
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- Parry Sugars Refinery, India
- IEA Clean Coal Centre - UK
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
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- Kalimantan Lumbung Energi - Indonesia
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Indogreen Group - Indonesia
- Indian Oil Corporation Limited
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Georgia Ports Authority, United States
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Australian Coal Association
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- The Treasury - Australian Government
- Central Java Power - Indonesia
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- Tamil Nadu electricity Board
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- GAC Shipping (India) Pvt Ltd
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
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- The University of Queensland
- AsiaOL BioFuels Corp., Philippines
- Formosa Plastics Group - Taiwan
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- Carbofer General Trading SA - India
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- London Commodity Brokers - England
- Bukit Asam (Persero) Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- ASAPP Information Group - India
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- Minerals Council of Australia
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- Electricity Generating Authority of Thailand
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
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