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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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- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- Interocean Group of Companies - India
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bangladesh Power Developement Board
- TNB Fuel Sdn Bhd - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- San Jose City I Power Corp, Philippines
- Mintek Dendrill Indonesia
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Makarim & Taira - Indonesia
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Ministry of Finance - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- Chettinad Cement Corporation Ltd - India
- Wilmar Investment Holdings
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Price Waterhouse Coopers - Russia
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- The University of Queensland
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Transport, Egypt
- The Treasury - Australian Government
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- Siam City Cement - Thailand
- London Commodity Brokers - England
- Mjunction Services Limited - India
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Manunggal Multi Energi - Indonesia
- Mercator Lines Limited - India
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- Uttam Galva Steels Limited - India
- Energy Development Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- Romanian Commodities Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Marubeni Corporation - India
- CNBM International Corporation - China
- Siam City Cement PLC, Thailand
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- MS Steel International - UAE
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- Parliament of New Zealand
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- White Energy Company Limited
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- IHS Mccloskey Coal Group - USA
- Coal and Oil Company - UAE
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