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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, 08 May 20
THE COLLAPSE OF THE OIL AND BUNKER FUEL MARKETS IN EARLY 2020 - PETER SAND
The sulphur regulation from the International Maritime Organization (IMO) that came into force on 1 January 2020 took the centre stage in the shipp ...
Friday, 08 May 20
LNG DEMAND FACED SEVERAL HEADWINDS IN THE FIRST QUARTER OF 2020 - GASLOG
LNG demand faced several headwinds in the first quarter of 2020 including a warmer than average winter in the northern hemisphere, high inventory l ...
Thursday, 07 May 20
IEEFA UPDATE: THE OUTLOOK FOR THERMAL COAL IN SOUTHEAST ASIA AND SOUTH ASIA
Seven headwinds are building to sustained growth in coal in Asia
The medium term outlook for thermal coal in Southeast Asia is posit ...
Thursday, 07 May 20
IMO 2020: BUNKER CLAIMS HANDLING GUIDE FOR A NEW DECADE - THE STANDARD CLUB
KNOWLEDGE TO ELEVATE
IMO 2020 is the term generally used to describe the following regulations under Annex VI of the International Convention ...
Thursday, 07 May 20
CRUDE OIL TANKER EARNINGS DROP 68% IN NINE DAYS - BIMCO
Crude oil tanker earnings have come down sharply in recent weeks with Very Large Crude Carrier (VLCC) earnings from the Middle East Gulf to China d ...
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- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Chettinad Cement Corporation Ltd - India
- Wilmar Investment Holdings
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Wood Mackenzie - Singapore
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Sakthi Sugars Limited - India
- Mercator Lines Limited - India
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Bukit Asam (Persero) Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- The Treasury - Australian Government
- Sindya Power Generating Company Private Ltd
- PTC India Limited - India
- Minerals Council of Australia
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Posco Energy - South Korea
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- The University of Queensland
- Petrochimia International Co. Ltd.- Taiwan
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- Timah Investasi Mineral - Indoneisa
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Oldendorff Carriers - Singapore
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- Latin American Coal - Colombia
- ASAPP Information Group - India
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Heidelberg Cement - Germany
- Ministry of Mines - Canada
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