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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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Friday, 01 May 20
GLOBAL COAL DEMAND TO FALL BY 8% IN Q1 2020 RELATIVE TO Q1 2019 - IEA
We expect global coal demand to fall by 8% in Q1 2020 relative to Q1 2019. This significant drop was driven by lower demand in the electricity sect ...
Friday, 01 May 20
LUKOIL SHARES LUBRICANT EXPERIENCE AFTER FIRST 100 DAYS OF OPERATION ON VLSFO
KNOWLEDGE TO ELEVATE
After 100 days of VLSFO operation, LUKOIL Marine Lubricants is sharing recent experience on VLSFO operation with NAVIGO M ...
Monday, 27 April 20
INCIDENT INVESTIGATION: SEARCH FOR THE CAUSE, NOT THE VILLAIN - GARD
Incident investigations often conclude with placing the blame for an incident on the crew. Causes of the incidents are usually identified as proced ...
Monday, 27 April 20
A 58,000DWT VESSEL WAS FIXED DELIVERY SINGAPORE TRIP VIA INDONESIA, RE-DELIVERY WC INDIA, AT $4,500 - BALTIC BRIEFING
Capesize
The tide turned this week for the Capesize market, as voyage rates registered dramatically falling fuel costs. This was led primarily ...
Sunday, 26 April 20
STRONGER BUNKER PRICES FAIL TO RALLY FREIGHT MARKET - FIS
VLSFO bunker prices rebounded by $22.50 to $229/mt in the port of Singapore but failed to turn around the spot freight market.
Some ...
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- Ambuja Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Savvy Resources Ltd - HongKong
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Deloitte Consulting - India
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- IHS Mccloskey Coal Group - USA
- Sinarmas Energy and Mining - Indonesia
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Bhatia International Limited - India
- Gujarat Sidhee Cement - India
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Chamber of Mines of South Africa
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- McConnell Dowell - Australia
- Global Green Power PLC Corporation, Philippines
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Parliament of New Zealand
- Kumho Petrochemical, South Korea
- Pendopo Energi Batubara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Malabar Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- Uttam Galva Steels Limited - India
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Mintek Dendrill Indonesia
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Salva Resources Pvt Ltd - India
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
- Siam City Cement PLC, Thailand
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Commonwealth Bank - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- Georgia Ports Authority, United States
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- Australian Coal Association
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Indika Energy - Indonesia
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Kideco Jaya Agung - Indonesia
- Ministry of Finance - Indonesia
- Tata Chemicals Ltd - India
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
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