Crude futures climbs amid tightened supply and demand outlooks

MOSCOW (MRC) -- Crude futures edged higher June 22 as the market weighed a tightening global supply picture against uncertain demand outlooks amid a spike in COVID-19 cases around the world, reported S&P Global.

NYMEX July WTI settled 71 cents higher at USD40.46/b and ICE August Brent settled up 89 cents at USD43.08/b. Front-month WTI last settled above USD40/b on March 6.

BofA Securities has raised its oil price forecast for the next two years on signs of faster-than-expected global oil demand recovery, massive industry spending cuts and strong OPEC+ adherence to curbing crude supplies.

Brent crude will likely average USD43.70/b this year, up USD6.70 from a previous forecast on March 8, BofA Global Research said in a report.

"Our more constructive crude oil view reflects renewed confidence in the ongoing global oil demand recovery, in the damage to supply created by deep capex curtailments across the oil industry, and in the solid OPEC+ agreement to curb output," BofA Global Research said.

The bank also raised its 2021 and 2022 Brent price forecasts to USD50 and USD55/b respectively.

NYMEX July RBOB settled up 1.97 cents at USD1.2913/gal and July ULSD climbed 72 points higher to USD1.2186/gal.

US crude inventories likely edged lower last week as an expected uptick in exports and refinery demand was blunted by a likely increase in production, an S&P Global Platts analysis showed June 22.

Commercial crude stocks are expected to have declined by 100,000 barrels to around 539.3 million barrels during the week ended June 19, analysts surveyed by Platts said.

Tensions between Libya and its neighbor Egypt flared this weekend after Cairo threatened to take "direct" action if Libya's UN-recognized Government of National Accord advanced on the Libyan city of Sirte. Further armed conflict in the region could lead to a prolonged shutdown of Libya crude production.

State-owned National Oil Corp. briefly restarted production at the 75,000 b/d El Feel and 300,000 b/d Sharara fields earlier this month after a nearly five-month long oil blockade.

The interjection of yet another actor into Libya's chaotic civil war could portend an extended shut in of Libyan crude production. However, Libyan crude price differentials were so far unfazed by the rhetoric. Platts Es Sider crude was assessed June 22 at a USD1.70/b discount to the Med dtd strip, the strongest since March 6.

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

MOSCOW (MRC) -- Celanese Corporation, a global chemical and specialty materials company, has increased July list and off-list selling prices for Vinyl Acetate Monomer (VAM) sold in the Americas, said the producer on its site.

The price increases below are effective for orders shipped on or after 1 July 2020, or as contracts otherwise allow, and are incremental to any previously announced increases.

Thus, VAM prices will rise, as follows:

- by USD0.05/lb - for the USA and Canada;
- by USD125/mt - for Mexico & South America.

As MRC reported earlier, Celanese last raised its VAM prices in the Americas on 17 January, 2020, as stated below:

- by USD0.05/lb - for the USA and Canada;
- by USD125/mt - for Mexico & South America.

According to MRC's DataScope report, April EVA imports to Russia dropped by 5,85% year on year to 3,050 tonnes from 3,250 tonnes a year earlier, and overall imports of this grade of ethylene copolymer into the Russian Federation increased in January-April 2020 by 1,55% year on year to 12,540 tonnes (12,350 tonnes a year earlier).

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Based in Dallas, Celanese employs approximately 7,700 employees worldwide and had 2019 net sales of USD6.3 billion.
MRC

MOSCOW (MRC) -- Crude oil futures were trading lower in mid-morning trade in Asia June 18 after latest US inventory data showed a rise in crude stockpiles for a second consecutive week, while fears of a resurgence in COVID-19 cases dampened demand recovery, reported S&P Global.

At 10:10 am Singapore time (0210 GMT), ICE Brent August crude futures were down 58 cents/b (1.42%) from the June 17 settle at USD40.13/b, while the NYMEX July light sweet crude contract was 76 cents/b (2%) lower at $37.20/b.

US commercial crude stocks climbed 1.22 million barrels to a fresh all-time high of 539.28 million barrels in the week ended June 12, US Energy Information Administration data showed June 17.

"We maintain our view that while we expect prices to continue increasing through the year, oil is expected to see short-term bearish pressures as we head towards the end of Q2," OCBC analysts said in a June 18 note.

While optimism came from a drawdown in gasoline and distillate stocks, the indicative improvement in demand failed to uplift sentiment as fresh COVID-19 outbreaks in the US and China continued to cast doubt on recovery.

China continues to tackle a potential resurgence in COVID-19 cases, reporting 28 new coronavirus cases as of end-June 17, media reports showed. Out of this, 21 cases were in Beijing.

The US recently saw record spikes in COVID-19 cases in six states as the economy gradually reopens.

On the OPEC+ front, the Joint Ministerial Monitoring Committee will meet via webinar later in the day.

Delegates had said the JMMC meeting is likely to focus on assessing compliance with quotas in May, and calculating volumes that over-producing countries will have to compensate for with additional cuts this summer.

In its latest monthly oil market report released June 17, OPEC kept its 2020 forecasts largely unchanged from the May outlook, noting a historic contraction in oil demand, but improving fundamentals in the months ahead.

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

MOSCOW (MRC) -- Arkema has kicked off the sale of its plexiglass polymethyl methacrylate (PMMA) business, which could raise about EUR1 billion (USD1.1 billion), Bloomberg reports citing people familiar with the matter, as per Chemweek.

Arkema CEO Thierry Le Henaff on 2 April announced the potential divestment of its methyl methacrylate (MMA) and PMMA business as part of the company’s ambition to become a world leader in specialty materials realigned around adhesive solutions, advanced materials, and coating solutions. Le Henaff said at that time that the best option for MMA and PMMA would be to divest the business, which in 2019 reported sales of EUR600 million.

Bloomberg says Arkema has sent potential bidders teaser documents with an overview of the Altuglas International division. The sale is attracting initial interest from private equity firms including Advent International, Rhone, SK Capital Partners and Triton Partners, Bloomberg says, adding that Arkema has not decided when to seek first-round bids and could wait until after the summer to formally solicit offers.

As MRC informed earlier, in October 2019, Arkema successfully brought on stream a new 90,000-ton acrylic acid reactor at its Clear Lake, Texas site to support the growth of its North American customers in the superabsorbents, paints, adhesives and water treatment markets.

As MRC informed earlier, Russia's output of products from polymers grew in April 2020 by 11.2% year on year due to quarantine restrictions. However, this figure increased by 3.4% year on year in the first four months of 2020. According to the Russian Federal State Statistics Service, April production of unreinforced and non-combined films decreased to 107,000 tonnes from 110,400 tonnes a month earlier. Output of films products grew in the first four months of 2020 by 12.5% year on year to 402,800 tonnes.

Arkema is a global manufacturer in specialty chemicals and advanced materials, with 3 business segments - High Performance Materials, Industrial Specialties, and Coating Solutions - and globally recognized brands. The Group reports annual sales of EUR8.8 billion. Buoyed by the collective energy of its 20,000 employees, Arkema operates in close to 55 countries.
MRC

MOSCOW (MRC) -- Crude oil futures were trading steady to higher in mid-morning trade in Asia June 22, with investors weighing mixed drivers at the start of a new week, said S&P Global.

At 10:00 am Singapore time (0200 GMT), ICE Brent August crude futures were up 18 cents/b (0.43%) from the June 19 settle at USD42.37/b, while the NYMEX July light sweet crude contract was 12 cents/b (0.30%) higher at USD39.87/b. "Sentiment was buoyed by OPEC's pledge to adhere better to agreed production cuts," ANZ analysts said in a June 22 note.

Crude prices have been buoyed by stepped-up pressure on OPEC+ members to adhere to production quotas following a June 18 meeting. OPEC+ crude production could fall by about 1 million b/d in July and August from May levels, based on plans submitted by Iraq and Kazakhstan to institute deeper output cuts to make up for violating their quotas and loading schedules issued by fellow compliance laggards Nigeria and Angola.

"However, there are still worrying signs ahead for the market with a second wave of COVID-19 cases in China and the US presenting a challenge for industry," the ANZ analysts said. Fears of a COVID-19 resurgence have limited gains in prices as the demand recovery outlook remains clouded.

"Traffic in Beijing has plunged as authorities battle a fresh outbreak. In the US, Apple has been forced to shut previously opened shops as cases rises in various states," the ANZ analysts noted. China reported 26 new confirmed coronavirus cases for June 20 and the emergence of a new cluster in Beijing has raised concerns of a second wave of infections.

A decline in US oil rigs was also supporting sentiment to some extent amid earlier concerns any recovery in prices could spur an increase in drilling. The US oil rig count fell by 10 to 189 in the week ending June 19, according to UOB analysts in a June 22 note citing Baker Hughes dat, noting it was the lowest since June 2009.

As MRC wrote 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.

MRC