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Oil prices reverse some losses but demand concerns persist

September 11/2020

MOSCOW (MRC) -- Oil futures clawed back some of the losses they sustained in the previous session, but a rebound in COVID-19 cases in some countries undermined hopes for a steady recovery in global demand, reported Reuters.

Brent crude LCOc1 was up 29 cents, or 0.7%, at USD40.07 a barrel by 1339 GMT after dropping more than 5% on Tuesday to fall below USD40 a barrel for the first time since June.

US crude CLc1 was up 57 cents, or 1.6%, at USD37.33 a barrel, having fallen nearly 8% in the previous session.

Both major oil benchmarks are trading close to three-month lows.

The global health crisis continues to flare with coronavirus cases rising in India, Great Britain, Spain and several parts of the United States.

The outbreaks are threatening to slow a global economic recovery and reduce demand for fuels from aviation gas to diesel.

Short-term oil market fundamentals look soft: the demand recovery is fragile, inventories and spare capacity are high, and refining margins are low, Morgan Stanley said.

Yet, the bank raised its Brent price forecast slightly higher to USD50 a barrel for the second half of 2021 with the dollar weakening and rising inflation expectations, it said.

Record supply cuts by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+ have helped support prices, but with grim economic figures being reported almost daily, the outlook for demand for oil remains bleak.

Chinas factory gate prices fell for a seventh straight month in August although at the slowest annual pace since March, suggesting industries in the worlds second-biggest economy continued their recovery from the coronavirus-induced downturn.

Earlier this year, as MRC wrote before, 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.


mrcplast.com
Author:Margaret Volkova
Tags:Europe, PP, PE, crude and gaz condensate, homopolymer PP, propylene, HDPE, ethylene, petrochemistry, BASF, Borealis, BP Plc, LyondellBasell, Sabic, Total Petrochemicals, Russia, USA.
Category:General News
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