MOSCOW (MRC) -- Crude oil futures were trading lower in mid-morning trade in Asia June 17, after settling higher overnight, as reports of fresh COVID-19 outbreaks continued to weigh on hopes of economic recovery, reported S&P Global.
At 10 am Singapore time (0200 GMT), ICE Brent August crude futures were down 64 cents/b (1.56%) from the June 16 settle at USD40.32/b, while the NYMEX July light sweet crude contract was 78 cents/b (2.03%) lower at USD37.60/b.
Both benchmarks had settled more than USD1.20/b higher June 16 after the release of bullish demand projections by the International Energy Agency and stronger-than-expected US retail sales data for May.
"However, the rally was capped by concerns about a second wave of COVID-19 cases. Beijing shut its schools and lifted its emergency response to level two to contain a new outbreak," ANZ analysts said in a June 17 note.
China reported 44 new coronavirus cases nationwide on June 16, comprising 11 imported and 33 local acquired cases, increasing concerns over a resurgence of infections, according to media reports.
"This comes amid rising cases in the US. The market was reminded of the damage the pandemic has caused the oil market, with the IEA calling it the biggest shock to world energy markets since WWII (World War Two)," ANZ analysts added.
While US markets remained buoyed by recent Federal Reserve announcements of efforts to stimulate the economy, the number of new COVID-19 cases continued to trend higher in the US, hitting record highs in six US states on June 16 and posing further concerns over oil demand recovery.
The outlook is expected to remain volatile as investors weighed new COVID-19 headlines versus the optimistic US market data seen earlier in the week.
US retail sales jumped by a record 17.7% month on month in May, even as May sales remained 6.1% lower from the same month a year earlier, latest data showed.
As MRC informed before, 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.
MRC