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Oil prices rise after OPEC meets; Libyan developments limit gains

September 23/2020

MOSCOW (MRC) -- Oil prices edged higher on Friday, bolstered by bullish signals from the  recent OPEC meeting, but gains were limited after a Libyan commander said a blockade on the country's oil exports would be lifted for a month, reported Reuters.

Both US crude and Brent were set for weekly gains after Saudi Arabia pressed allies to stick to production quotas, Hurricane Sally cut US production, and banks including Goldman Sachs predicted a supply deficit. Brent was set for a weekly rise of 9%, and WTI was on track to rise 11%.

Brent crude was up 1 cent to USD43.31 a barrel by 11:20 a.m. EDT (1520 GMT), while US oil futures rose 26 cents to USD41.23 a barrel.

Prices retraced some gains after eastern Libyan commander Khalifa Haftar announced he would lift his blockade of oil output for one month. The blockade slashed Libyan production to just over 100,000 barrels per day (bpd) now from around 1.2 million bpd previously.

It was unclear how quickly Libya could ramp up production.

On Thursday, the key panel for the Organization of the Petroleum Exporting Countries and its allies pressed for better compliance with oil output cuts against the backdrop of falling crude prices.

Saudi Arabia's Prince Abdulaziz bin Salman told a gathering on Thursday that the OPEC+ producer group could hold an extraordinary meeting in October if the oil market soured because of weak demand and rising coronavirus cases, according to an OPEC+ source.

"The alliance showed strength and reassured the market that if further action will be needed to discipline sub-compliers and balance the market, it would be taken," said Bjornar Tonhaugen, Rystad Energy's head of oil markets.

Goldman Sachs predicted a market deficit of 3 million bpd by the fourth quarter and reiterated its target for Brent to reach USD49 by year end and USD65 by the third quarter of 2021.

Swiss bank UBS also pointed to the possibility of under supply, forecasting Brent would rise to USD45 a barrel in the fourth quarter and to USD55 by mid-2021.

In the Gulf of Mexico, US producers started rebooting rigs following a five-day closure due to Hurricane Sally.

A tropical depression in the western part of the Gulf of Mexico could become a hurricane in the next few days, potentially threatening more oil facilities.

As MRC informed earlier, global oil refiners reeling from months of lackluster demand and an abundance of inventories are cutting fuel production into the autumn because the recovery in demand from the impact of coronavirus has stalled, according to executives, refinery workers, and industry analysts. Refiners cut output by as much as 35% in spring as coronavirus lockdowns destroyed the need for travel. As lockdowns eased, refiners increased output slowly through late August. But in top fuel consumers the United States and elsewhere, refiners have been decreasing rates for the last several weeks in response to increased inventories, a sustained lack of demand, and in response to natural disasters.

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

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.


mrcplast.com
Author:Margaret Volkova
Tags:PP, PE, LLDPE, crude and gaz condensate, propylene, ethylene, petrochemistry, Libya, Russia, Saudi Arabia, USA.
Category:General News
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