MOSCOW (MRC) -- Oil fell more than 1% to below USD41 a barrel after a report showed a rise in crude inventories in the United States, reviving concerns about oversupply and weak demand because of the coronavirus crisis, said Hydrocarbonprocessing.
The report from the American Petroleum Institute, an industry group, said crude stocks rose by 8.4 million barrels, rather than falling as analysts forecast. The U.S. government’s official stocks figures are due out later on Wednesday.
"Indications from the American Petroleum Institute show that stocks built quite a lot,” said Bjornar Tonhaugen of Rystad Energy. “What else can you do as a trader but rush to sell?" Brent crude LCOc1 was down 50 cents, or 1.2%, to USD40.68 a barrel at 1325 GMT. U.S. West Texas Intermediate (WTI) CLc1 also dropped 50 cents, or 1.3%, to USD38.44.
Both benchmarks had hit three-month highs on Monday. Brent has more than doubled since falling to a 21-year low below USD16 in April. But some analysts think the market has risen too far as the coronavirus pandemic continues.
“With equity markets edging lower, and a vast amount of good news baked into oil prices at these levels, it was no surprise that the oil market’s confidence wavered slightly,” said Jeffrey Halley, senior market analyst at OANDA. Official government figures on U.S. stockpiles from the Energy Information Administration are due later on Wednesday.
Prices have been supported by a record oil supply cut of 9.7 million barrels per day (bpd), about 10% of pre-coronavirus daily demand, by the Organization of the Petroleum Exporting Countries (OPEC), Russia and others, a group known as OPEC+.
An easing of government lockdowns that sought to limit the spread of the virus has revived demand by boosting travel and economic activity, also supporting the market. OPEC+ agreed on Saturday to extend the record cut for another month until the end of July.
While this helped prices, the market came under pressure after Saudi Arabia, Kuwait and the United Arab Emirates decided not to extend their extra voluntary supply reductions.
On June 6, the 23 members of the OPEC+ alliance renewed their April agreement to reduce production by 9.6 million b/d through July. Under the plan, Saudi Arabia is cutting its monthly output by at least 8.5 million b/d, which is down almost 30% from the 12 million b/d it said it was producing in April. The kingdom had previously agreed to institute an additional 1 million b/d in cuts for June but has indicated it would not be willing to continue those curbs in July.
Ethylene and propylene are feedstocks for producing PE and PP.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
MRC