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