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Thursday, 14 May 20
OPEC REVISES DOWN GLOBAL OIL DEMAND FORECAST AGAIN
 Crude Oil Price Movements
Crude oil prices recorded a second sharp monthly drop in April, amid an increasing oil surplus in the spot market. The OPEC Reference Basket (ORB) value plummeted by $16.26, or 48.0%, m-o-m, to $17.66/b, the lowest monthly level since December 2001. With regard to crude futures, ICE Brent declined by $7.10, or 21%, to average $26.63/b, while NYMEX WTI fell by $13.75, or 45.2%, to average $16.70/b. The contango structure of the forward curves of all crude futures benchmarks steepened further, on further worsening of global oil market fundamentals and a rapid increase in global oil inventories. Money managers firmly raised their combined futures and options net long positions in April in both ICE Brent and NYMEX WTI contracts.
World Economy
The world economy is forecast to face a recession in 2020, declining by 3.4%, following global economic growth of 2.9% in the previous year. Within the OECD, the US is forecast to contract by 5.2% 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 8.0% in 2020, compared to growth of 1.2% in 2019. Japan is forecast to contract by 5.1% in 2020, comparing to growth of 0.7% in 2019. China’s 2020 GDP is forecast to grow by 1.3%, recovering from a sharp contraction in 1Q20, and following growth of 6.1% in 2019. India is forecast to decline by 0.2%, a sharp slowdown from already weakening growth of 5.3% in 2019. Brazil’s economy is forecast to contract by 6.0% in 2020, following growth of 1.1% in 2019. Russia’s economy is forecast to contract by 4.5% in 2020, after growth of 1.3% in 2019, not only due to COVID-19, but also because of the considerable decline in oil prices.
World Oil Demand
For 2019, world oil demand growth is kept broadly unchanged compared to last month’s assessment, estimated to have grown by 0.83 mb/d, y-o-y, to average 98.72 mb/d. In 2020, world oil demand growth is adjusted lower by 2.23 mb/d and is now forecast to drop by 9.07 mb/d. However, the worst contraction in major oil demand centers around the world is expected to take place in the 2Q20, mostly in OECD Americas and Europe, with transportation and industrial fuels affected the most. As such, OECD oil demand is now revised lower by 1.20 mb/d while non-OECD oil demand growth was adjusted down by 1.03 mb/d, for total oil demand to reach 90.59 mb/d. Indeed, demand contraction in 2020 can be mitigated with sooner than expected easing of government COVID-19 related measures, and faster response of economic growth to the implemented extraordinary stimulus packages.
World Oil Supply
The non-OPEC oil supply growth estimate in 2019 is now revised up slightly by 0.04 mb/d from the previous month’s assessment, due to an upward revision in Australia’s production data, and is estimated to have grown by 2.02 mb/d. For 2020, non-OPEC oil supply is revised down further by almost 2.0 mb/d from the previous projection, and is now forecast to decline by 3.5 mb/d. The main revisions of the month are based on production shut-ins or curtailment plans announced by oil companies – including the majors – particularly in North America. Globally, not including the countries participating in the Declaration of Cooperation (DoC) and as of 6 May 2020, around 3.6 mb/d of production cuts have been announced, so far, in response to the lack of demand, low oil prices, excess supply and limited storage capacity. The 2020 oil supply growth forecast for the US is revised down by 1.3 mb/d to now show a decline of 1.4 mb/d y-o-y. Other large downward revisions are undertaken for Canada and Brazil by 0.3 mb/d and 0.1 mb/d, respectively. Oil supply in 2020 is 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 is forecast to grow by 0.04 mb/d to average 4.83 mb/d. In April, OPEC crude oil production increased by 1.80 mb/d m-o-m to average 30.41 mb/d, according to secondary sources
Product Markets and Refining
Operations Refinery margins in the Atlantic Basin rebounded in April. Deeper refinery intake cuts as well as low feedstock prices helped offset weak demand. In addition, the relaxation of confinement measures in the US and Europe amid the onset of the driving season, provided much-needed stimulus to the top of the barrel. In Asia, however, stronger product availability, as refineries increased processing rates, outpaced product inventory drawdowns amid a lack of demand from overseas, weighed on the regional product market.
Tanker Market
April was a stellar month for the tanker market with both dirty and clean rates seeing spikes during the month. Dirty freight rates peaked early in April and then trended lower, although remaining at relatively high levels. Rates were supported by a surge in tanker demand, driven by low crude prices and a need to push out excess supplies amid concerns about the availability of onshore storage capacity. Meanwhile, clean tanker rates jumped to historic highs in the middle of April, as refiners and traders looked to boosting product exports and turned to floating storage. However, rates returned to more typical levels by the end of the month. The expected voluntary and involuntary production reductions are expected to weigh on tanker demand in the coming months, although increased floating storage will provided offsetting support.
Crude and Refined Products Trade
According to preliminary data, US crude imports in April fell to 5.4 mb/d – the lowest since 1992 – while the country’s crude exports averaged 3.2 mb/d, down from a peak of 3.7 mb/d in February 2020. In March, China’s crude imports averaged 9.7 mb/d, falling below 10 mb/d for the first time in eight months. Product exports from China surged to 1.85 mb/d, the second highest level on record, led by a jump in diesel exports. India’s crude imports dipped in March to average 4.6 mb/d, impacted by the government-ordered lockdown which began toward the end of the month. India’s product exports rose 10% m-o-m, supported by an increase in diesel exports. Crude imports into Japan increased for the first time in two months, averaging 3.1 mb/d in March, while product imports and exports were slightly lower. The latest official data for OECD Europe shows crude exports continuing to fall in January, reaching 2.2 mb/d.
Commercial Stock Movements
OECD commercial oil stocks rose by 57.7 mb m-o-m in March to stand at 3,002 mb. This was 125.8 mb higher than the same time one year ago and 88.6 mb above the latest five-year average. Within components, crude stocks surged by 49.1 mb, while product stocks rose by 8.6 mb, m-o-m. In terms of days of forward cover, OECD commercial stocks surged by 8.9 days m-o-m in March to stand at 86.1 days. This was 25.1 days above March 2019, and 23.8 days above the latest five-year average. Preliminary data for April showed that US total commercial oil stocks surged by 81.1 mb m-o-m to stand at 1,395 mb. This was 136.1 mb, or 10.8%, above the same period a year ago, and 123.7 mb, or 9.7%, higher than the latest five-year average. Within components, crude stocks climbed by 47.9 mb, and product stocks rose by 33.2 mb m-o-m in April. Balance of
Supply and Demand
Demand for OPEC crude in 2019 stood at 29.8 mb/d, 1.2 mb/d lower than the 2018 level. For 2020, and following the recent agreement reached at the extraordinary OPEC and non-OPEC Ministerial Meetings in April, demand for OPEC crude is expected at 24.3 mb/d, which is 5.6 mb/d lower than the 2019 level. It is worth noting that demand for OPEC crude in 2020 remained almost the same as last month’s assessment, both considering the voluntary adjustment volumes under the Declaration of Cooperation (DoC) framework. However, additional reductions recently announced by several OPEC member countries, above and beyond their voluntary commitments under DoC, are expected to expedite market re-balancing, and improve the demand for OPEC crude in 2020.
Source: OPEC
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Wednesday, 06 May 20
COST CHALLENGES IN A US$20/BBL WORLD - WOOD MACKENZIE
A new approach is needed to ensure supply sector resilience
How will US$20/bbl affect the oil and gas supply chain?
It’s going to g ...
Wednesday, 06 May 20
MARKET INSIGHT - INTERMODAL
It comes as no surprise that activity in the dry bulk SnP market remains soft, with asset values caught in the downward spiral generated by the Cov ...
Wednesday, 06 May 20
FLOATING STORAGE OF OIL CARGOES - STANDARD CLUB
KNOWLEDGE TO ELEVATE
Due to a combination of circumstances there is now a worldwide shortage of storage space ashore for both unrefi ...
Wednesday, 06 May 20
IRON ORE TRADE REMAINS REMARKABLY RESILIENT THIS YEAR, AT LEAST IN ASIA - BANCHERO COSTA
Iron ore trade remains remarkably resilient this year, at least in Asia, despite the global economic impact from COVID-19. In the first 4 months of ...
Tuesday, 05 May 20
SUPRAMAXES: YTD SLIDE HAS BEEN 45%, WITH THE AVERAGE FOR 2020 TCA HOLDING AT US$5,793 - ALLIED
It has been almost three months since the WHO officially categorized the current coronavirus outbreak as a global pandemic, an outbreak that has br ...
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- MS Steel International - UAE
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Oldendorff Carriers - Singapore
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- The University of Queensland
- SN Aboitiz Power Inc, Philippines
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Wood Mackenzie - Singapore
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- Merrill Lynch Commodities Europe
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- Australian Coal Association
- India Bulls Power Limited - India
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Mines - Canada
- Planning Commission, India
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- Bukit Baiduri Energy - Indonesia
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- Kepco SPC Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Africa Commodities Group - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- GMR Energy Limited - India
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Romanian Commodities Exchange
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- Bhatia International Limited - India
- Anglo American - United Kingdom
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- Rashtriya Ispat Nigam Limited - India
- Antam Resourcindo - Indonesia
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- New Zealand Coal & Carbon
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- Aboitiz Power Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- Global Green Power PLC Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- San Jose City I Power Corp, Philippines
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- Bharathi Cement Corporation - India
- Petron Corporation, Philippines
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- Agrawal Coal Company - India
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