Crude oil futures steady on OPEC+ planned compensation cuts

MOSCOW (MRC) -- Crude oil futures were stable in mid-morning trade in Asia on August 21 as planned compensation cuts by the OPEC+ coalition offset a bearish US jobs report amid worries of a slowing economic recovery, reported S&P Global.

At 10:37 am Singapore time (0237 GMT), the ICE Brent October crude futures were up 16 cents/b (0.36%) from the Aug. 20 settle at SUD45.07/b, while the new front-month NYMEX October light sweet crude contract was up by 9 cents/b (0.21%) at USD42.91/b.

The global crude complex was rangebound last week as a drawdown in US commercial crude and gasoline inventories was offset by a decline in total products supplied, US Energy Information Administration data released Aug. 19 showed.

Meanwhile, the headline OPEC+ Joint Ministerial Monitoring Committee meeting Aug. 19 proved to be supportive for prices as the coalition continued to put a strong focus on compliance and compensation cuts.

OPEC+ members that had exceeded their production quotas in May, June and July will have to cut a combined extra 2.31 million b/d as compensation by the end of September, S&P Global Platts reported earlier. Notably, Iraq and Nigeria were the two biggest laggards, overproducing by 851,000 b/d over the three months, while Nigeria was over its limit by 315,000 b/d.

"Industry reports estimate that approximately 1.2 million b/d of additional cuts through August and September are needed to offset oversupply to date, implying OPEC+ cuts fall to 8.9 million b/d in the current phase instead of the 7.7 million b/d target," Stephen Innes, chief global markets strategist at AxiCorp, said in a Aug. 21 note.

These factors combined allowed Brent crude futures to continue to trade in a tight range around the USD45/b level, while NYMEX WTI stayed slightly below USD43/b.

However, the continued spread of COVID-19 worldwide continues to weigh heavily on economic recovery, reviving concerns of energy demand.

US initial jobless claims for the week ended Aug. 15 was reported at 1.11 million, higher than analysts' expectations of a 925,000 gain and the 971,000 figure reported in the previous week, US Labor Department data released on Aug. 20 showed.

Global COVID-19 case counts stood at 22,539,975, while total daily infections worldwide shot back up to 273,374 cases, slightly lower than the record of 304,449 cases set on Aug. 14, latest data from John Hopkins University showed.

"On the health front, there is no question that traders are still peering into a cloudy view-finder as even with new COVID-19 cases declining across the US, we know that can change on a dime as evidenced by recent second wave breakouts around the world. And it is going to take some time for people to feel safe to move freely and possibly only when a vaccine is in hand," Innes added.

As MRC wrote before, US crude oil stockpiles fell in the second week of August even as net imports jumped sharply, while fuel demand dipped as well, according to the US Energy Information Administration's statement. Crude inventories fell by 1.6 million barrels in the week to Aug. 14 to 512.5 million barrels, less than analysts’ expectations in a Reuters poll for a 2.7 million-barrel drop. Net US crude imports rose by 1.1 million barrels per day to 3.6 MMbpd, the EIA said.

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.

And 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 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.
MRC

MOSCOW (MRC) -- The US energy industry was preparing for a major hurricane strike, cutting crude production at a rate approaching the level of 2005’s Hurricane Katrina and halting oil refining at plants along the Texas/Louisiana coast, reported Reuters.

Officials in the two states called for hundreds of thousands of people to evacuate as Hurricane Laura intensified and forecasters predicted it would become a major hurricane with sustained, 115 mile per hour (185 kph) winds.

The intensification will bring at least a 10-foot (3-meter) storm surge to the upper Texas coast later this week and could produce a devastating category 4 hurricane, said Chris Kerr, a meteorologist at agriculture, energy and weather data provider DTN.

Oil producers on Tuesday had evacuated 310 offshore facilities and shut 1.56 million barrels per day (bpd) of crude output, 84% of Gulf of Mexico’s offshore production, near the 90% outage that Katrina brought 15 years ago.

The storm will make landfall by early Thursday in an area that accounts for more than 45% of total US petroleum refining capacity and 17% of oil production, according to the Energy Information Administration.

Refiners that produce gasoline and diesel fuel were taking steps to halt eight coastal facilities with nearly 2.78 million bpd of processing, 14.6% of the U.S. total capacity, according to Reuters tallies.

The impact on refineries so far is less than Hurricane Harvey, whose drenching rains took down nearly one quarter of US refining capacity three years ago.

US gasoline futures have jumped as much as 10% since Friday, while crude benchmarks settled at a five-month high on Tuesday due to the shutdowns.

“There will be a significant storm surge from Galveston (Texas) to the Sabine River,” an area encompassing some of the region’s largest refineries, said DTN’s Kerr. “There are ideal conditions in central and west Gulf for rapid intensification.”

Officials in several Texas and Louisiana communities called for mandatory evacuations affecting half a million people. Residents from areas of Houston to Orange, Texas, should flee the area and seek shelter inland, Texas officials said.

Cheniere Energy Inc, the largest US exporter of liquefied natural gas, evacuated staff and suspended operations at its Sabine Pass LNG export terminal on the Texas/Louisiana border.

Motiva Enterprises, Total SA and Valero Energy began cutting operations at their Port Arthur, Texas, refineries, according to people familiar with the matter.

Total, Motiva and Valero confirmed the shutdowns, and a Valero spokeswoman said it also was reviewing the risks to its Texas City, plant southeast of Houston.

Citgo Petroleum said it has begun to halt processing at its 418,000 bpd refinery in Lake Charles, Louisiana.

Exxon Mobil Corp also began shutting production at its large Beaumont, Texas, refinery and reduced output at its Baytown, Texas, plant ahead of a possible shutdown.

Exxon confirmed it was initiating a shutdown at Beaumont and was preparing for possible severe weather at its Baytown refinery and chemical complex, a spokesman said. If the Baytown plant fully halts processing, total shutdowns along the coast would hit 2.78 million bpd.

Ethylene and propylene are feedstocks for producing 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.
MRC

MOSCOW (MRC) -- Preparing for hurricane Laura, Phillips 66 began the shutdown of its Lake Charles manufacturing complex in Louisiana, which includes its 260,000 barrels per day refinery, reported Reuters.

The storm is forecast to be near major hurricane strength when it approaches the coast.

“Non-essential personnel have been released from work ahead of the storm,” the company said on its website.

As storms took aim at the US Gulf Coast, energy companies have moved to cut production at oil refineries after shutting 82% of the area’s offshore crude oil output.

As MRC informed before, earlier this month, US refiner Phillips 66 said it plans to reconfigure its refinery in Rodeo, California to produce renewable fuels from used cooking oil, fats, greases and soybean oils.

We remind that US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

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.
MRC

MOSCOW (MRC) -- L&T Hydrocarbon Engineering (LTHE), a wholly-owned subsidiary of Larsen & Toubro (L&T), has signed a Memorandum of Understanding (MoU) with NTPC to build a CO2-to-methanol demonstration plant in an NTPC power station, according to The Hindu Business Line.

LTHE will be the engineering, procurement and construction (EPC) partner to build a plant that will comprise three sub-units, namely CO2 capture from Flue Gas, H2 production by electrolysis of water, and catalytic conversion of CO2 & H2 to methanol, the company said.

Subramanian Sarma, Whole-Time Director and Senior Executive Vice President (Energy), said: “This development towards establishing CO2 to methanol plant is an important step towards India’s commitment to combat climate change. LTHE, together with NTPC, will leverage its vast experience in engineering, construction and project management to successfully deliver this demonstration project.”

As per this MOU, LTHE and NTPC will further collaborate to accelerate the development and subsequently commercialise CO2 to methanol plants. In Q1 FY21, the hydrocarbon segment bagged orders worth 1,220 crore, a decline of 64 per cent year-on-year. The total order book of the segment stood at ?42,094 crore, with the international order book constituting 49 per cent of the total order book.

As MRC informed before, Sinopec Zhongyuan Petrochemical, part of Sinopec Group, has taken off-stream its methanol-to-olefins (MTO) plant. The company halted operations at the plant on July 24, 2020 for a maintenance turnaround. The plant is likely to remain off-line till early-November, 2020. Located at Henan in China, the MTO plant has an ethylene and propylene capacity of 100,000 mt/year each.

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.
MRC

MOSCOW (MRC) -- Cefic says it is looking for tenders to provide consultancy support to assist with its plan to develop its own general impact assessments to assess and quantify the impact of the EU climate-neutrality objective by 2050 on chemical value chains, reported Chemweek.

The application period for offers will close on 16 October 2020 at midnight CET, Cefic says.

The tenderer must have experience in the field of data modeling, chemical value chains and processes, greenhouse gas (GHG) abatement technologies, GHG footprint calculations with life-cycle thinking, GHG protocols, and markets that are relevant for the project such as chemicals, energy, biomass, and waste, Cefic says. Experience with the safe and compliant handling of confidential information is also necessary, it says.

As MRC informed before, in mid-July, 2020, Cefic called on EU member states to agree urgently on a recovery plan to restart Europe’s economy and kick off investments toward a green and digital transition. The EU chemical industry is seeking investments in building renovation, clean mobility, the development of all forms of clean hydrogen, chemical recycling, and carbon capture and storage as well as carbon capture and utilization, Cefic said then.

We remind that in 2017, SIBUR joined the European Chemical Industry Council (CEFIC). SIBUR has also become a member of the European Committee of Ethylene Producers and Technology Suppliers (EEPC, part of CEFIC). Membership in the Council allowed SIBUR to take part in the work of 93 sectoral groups on more than 120 petrochemical products, in 90 strategic groups working on issues of sustainable development, innovation, trade, energy and law in the field of petrochemicals.

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.
MRC