MOSCOW (MRC) -- High-frequency data from the United States has provided the first convincing indication of global oil market rebalancing, but it also underscore the market’s vulnerability to a COVID-19 resurgence and new lockdowns, said Hydrocarbonprocessing.
Total stocks of crude and refined products in the United States fell by 9 million barrels last week, the first week-on-week decline since the end of February, according to the U.S. Energy Information Administration. Coming after stocks increased by 225 million over the previous 17 weeks, the drawdown barely made a dent in the total, but the change in direction was significant.
Crude stocks fell by 7 million barrels and gasoline by 3 million, with distillate stocks unchanged at a time of year when they would normally be rising in the gasoline-intensive summer driving season. Gasoline stocks ended the week 7% higher than the five-year seasonal average, but the surplus has fallen from 8% the previous week and a peak of more than 10% in early June.
Distillate stocks were still a massive 26% higher than the five-year average but the surplus had narrowed from 28% the previous week and 29% in early June.
Refiners have managed to get fuel stocks under control by increasing crude processing very slowly as the economy has emerged from lockdown.
Last week refiners left processing unchanged after increasing it progressively since the start of May, demonstrating restraint in an effort to control inventories. Processing was still almost 2.8 million barrels per day (bpd), or 16%, below the five-year seasonal average over 2015-2019.
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 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
MRC