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