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Oil steadies ahead of OPEC+ meeting

June 02/2020

MOSCOW (MRC) -- Crude oil futures were steady to marginally higher in mid-morning trade in Asia June 2 as traders looked toward a possible extension of output cuts by OPEC+ in an upcoming meeting, reported S&P Global.

At 09:55 am Singapore time (0155 GMT), ICE Brent August crude futures were up 19 cents/b (0.50%) from June 1's settle at USD38.51/b, while the NYMEX July light sweet crude contract was 8 cents/b (0.23%) higher at USD35.52/b.
"Expectations of an extension of the current supply cuts by OPEC+ when they meet this week is keeping prices buoyed," OCBC analysts said in a note Tuesday.

"If OPEC+ can deliver on the reported extension, we expect Brent to possibly test USD40/b," the analysts added.

US President Donald Trump and Russian President Vladimir Putin spoke June 1 about the importance of implementing the OPEC+ oil supply cuts and stabilizing global oil prices, the Kremlin said in a statement.

"It was stated that this multilateral agreement, reached with the active support of the presidents of Russia and the United States, would lead to a gradual restoration of oil demand and price stabilization," the Kremlin said.

The OPEC+ accord calls for 9.7 million b/d in production cuts for May and June, before easing to 7.7 million b/d for the second half of the year, then to 5.8 million b/d for January 2021 through April 2022.

"A confirmation of the meeting along with suggestions from members on the willingness to comply may be necessary to keep prices thriving at current levels. Any leap through the resistance zone may still boil down to demand," IG market strategist Pan Jingyi said in a note June 2.

Apart from OPEC+ commitment, investors have been monitoring Chinese demand recovery and US product demand, along with any fresh developments in the US-China trade tensions.

The OPEC+ meeting may be moved up to June 4, from the scheduled June 9-10, so July nominations can factor in any changes to oil production quotas, S&P Global Platts reported earlier citing sources familiar with the discussions.

As MRC informed previously, global oil consumption cut by up to a third in Q1 2020. What happens next in the oil market depends on how quickly and completely the global economy emerges from lockdown, and whether the recessionary hit lingers through the rest of this year and into 2021.

Earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

We remind that, in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim.  At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
Author:Margaret Volkova
Tags:Europe, PP, PE, LLDPE, crude and gaz condensate, homopolymer PP, PP random copolymer, propylene, LDPE, ethylene, petrochemistry, BASF, Borealis, BP Plc, LyondellBasell, Sabic, Total Petrochemicals, Rossiya, USA.
Category:General News
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