Japan may need as much as 13 Mt of additional LNG by 2030 to help fill the gap left by the closure of the ~100 less-efficient coal-fired power plants 

A few nuances to Japan’s coal support abroad:

The impact of US export turndowns this summer is one of the main reasons why spot freight rates have held so low over the past couple of months.

US export facilities    have an outsized impact on global shipping demand owing to their long      distances from the main global demand centres of Europe and Northeast Asia

Impact of slow sailing on freight markets.

The speed of the global fleet has already dropped below the lowest point last year in recent months, with the Q2 20 average of 13 knots for outbound journeys compared to 13.6 knots over the whole of 2019. A drop in the sailing speed from last year’s average meant that global average cargo deliveries needed an extra 1.2 sailing days to complete a round trip voyage in Q2 20. This in turn would have required an additional 16 vessels (403 in total) to provide enough shipping capacity for the 29.6 Mt/m of global exports in Q2 20. This helped offset some of the impact of low US LNG shipping demand.

Charts on twitter.com/macrocrude 8th of July 2020

In this podcast, we help you understand the carbon math we face as humanity trying to keep temperatures from rising below 1.5 degrees.

As a result of COVID, daily wage earners, labourers in megacities in Asia, South America, Middle East have been impacted.  As their daily stream of income came to a halt, their remittances to their families back home in their villages and small towns were cut. With no wages to support their own living expenses (food, rent) they were forced to flee as well, at a time when there was no public transportation (no rail, no buses) which meant they had to trek 500 to 900 kilometres by foot carrying their belongings and families with them.

Many migrants are unlikely to return given the semi-state of lockdowns that exist. Given the experience they had to go through while returning, and also balancing out the low probability of finding a job given the slow easing of restrictions and also the health dangers - they may choose to remain in their homelands. Politically there is motivation in their local areas to make them stay by getting government funds.

This changes the demographics in mega cities, it changes economics for small businesses and for construction industries emerging after the lockdown. For central banks in emerging markets - inflation may be a concern.

At the moment, the skew of investor and activist pressure on decarbonisation is highly towards energy producers (oil and gas). You rarely see climate protests in front of residential developers, airlines, agricultural companies. In this context, European airlines – some of the European Union’s biggest polluters – have sought an unprecedented €32.9 billion in government bailouts since the beginning of the Covid-19 crisis, without binding environmental conditions. 

There needs to be more pressure on consumers of energy (airlines, building operators, real estate agents, company's travel policies and operational aspects).

We go through the key drivers behind the Brent Crude oil price falling below US$40/bbl. A shift in sentiment from just days ago when prices were about to test US$45/bbl. The Dallas Fed Survey results we tweeted are of importance here too, as it gives guidance on how US shale producers are responding to the current price and demand environment. 

· The six major US LNG terminals reported a utilisation rate of 40% in late June as the marginal LNG supply source adjusts to lower gas prices. Since April, when the market impact from the virus began to take shape, ~130 cargoes have been cancelled for loading in the US.

· US LNG cargo cancellations for August currently estimated at 40-45 (similar to July levels). More than half of the cancelled US cargo loadings for August are tied to Cheniere's Sabine Pass terminal in Louisiana (16 – 23 cargoes) and Corpus Christi terminal in Texas. The Gulf Coast Marker (GCM) to Henry Hub spread has been negative since the end of March and has reached differentials as wide as negative US$0.7/MMBtu, implying very negative export economics.

· Gas prices in the US are likely to come under further pressure this summer as US natural gas production has recovered this month – partly to do with the resilience of dry gas plays and reflecting reversal of US oil field shut-ins at wet gas plays. Production is recovering at a time of weak domestic demand, limited export availability to exports as well as lower feedgas deliveries to US LNG export facilities (down 38% compared to May levels).

· In Europe, gas storage capacity has reached 77% by late-June compared with the five-year average of 53% for the same period. Storage is expected to be full by August and is likely to place further pressure on gas prices over the next few months until demand picks up.

Shocked by BP's $13 - $17 billion charge? Well, Deloitte expects  the shale industry to impair/write-down the value of their assets by as much as $300 billion—with significant impairments expected in Q2 2020. One may argue against reading too much into this “noncash” impairment figure of companies. Yes, it is just an accounting adjustment. But it translates into writing off the invested shareholder’s equity and carrying a debt that may have been taken to develop or acquire the impaired asset. The result: an immediate increase in the industry’s #Leverage ratio from 40 to 54 % which can trigger many negative sequences of events, including bankruptcy bankruptcy. 

The Australian economy is recovering at full steam. Solid retail sales show the resilience of the Australian consumer. And the GDP estimates are a lot better despite the twin shocks of the bush fire and COVID. This episode goes through some of the positives for the Australian economy as well as some of the headwinds it still faces. Ending with a view on the Australian dollar.