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Saudi Arabia may cut September crude oil prices to Asia

August 14/2020

MOSCOW (MRC) -- Top oil exporter Saudi Arabia may cut its September official selling price (OSP) for crude sold in Asia, tracking falling Middle East benchmarks and weak refining margins, according to industry sources, said Hydrocarbonprocessing.

Five sources from Asian refineries on average expect the September OSP for flagship Arab Light crude to fall by 61 cents a barrel, though forecasts range from a cut of USD1 to 20-30 cents, a Reuters survey showed. Slow demand recovery amid the second wave of COVID-19 infections has depressed spot prices for Middle Eastern crude this month, while Asias refining margins remained weak, they said.

Although the monthly average of cash Dubais premium to swaps dipped by only 6 cents so far this month, DME Oman and cash Dubai this week turned to discounts to swaps for the first time since May, data compiled by Reuters showed.

Prompt Dubai has flipped from backwardation into contango in late July. The contango structure, where prompt prices are lower than future prices, usually indicates an immediate oil surplus. Asias margins for gasoline, jet fuel and high sulfur fuel oil weakened in July, while cracks for naphtha, gas oil and low sulfur fuel oil showed improvement.

Saudi crude OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting more than 12 million barrels per day (bpd) of crude bound for Asia. State oil giant Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices.

Saudi Aramco officials as a matter of policy do not comment on the kingdoms monthly OSPs.

We remind that data collected and tabulated by the American Chemistry Council (ACC) show that due to growth in China, global chemicals production rose by 0.6 percent in June, an improvement from the 0.5 percent decline in May, Production has been declining throughout this year, with the last monthly gain occurring in December 2019. During June, chemical production fell in major regions except Asia-Pacific. Headline global production was off 7.2 percent year-over-year (Y/Y) on a three-month moving average (3MMA) basis and was off 7.4 percent from the peak December level. Global output stood at 109.8 percent of its average 2012 levels.

At the same time, Russia's output of chemical products rose in June 2020 by 2.6% year on year. However, production of basic chemicals increased year on year by 4.9% in the first six months of 2020. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the output in January-June. June production of polymers in primary form fell to 791,000 tonnes from 820,000 tonnes in May partially because of a scheduled shutdown for maintenance at ZapSibNeftekhim. Output of polymers in primary form totalled 4,900,000 tonnes over the stated period, up by 14.8%  year on year.

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

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.


mrcplast.com
Author:Anna Larionova
Tags:petroleum products, crude oil, PP, PE, petrochemistry.
Category:General News
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