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Crude oil prices rangebound after Libya's NOC lifts force majeure

September 24/2020

MOSCOW (MRC) -- Oil futures were caught in a range during the mid-morning trade in Asia Sept. 21, even as Libya's state-owned National Oil Corp. lifted the force majeure on oil fields and ports on Sept.19, raising concerns of oversupply in a market plagued by demand uncertainty, reported S&P Global.

At 11.15 am Singapore time (0315 GMT), ICE Brent November crude futures were trading at $43.19/b, up 0.04 cents/b (0.09%) from the Sept. 18 settle, while the NYMEX October light sweet crude contract was at $41.14/b, up 3 cents/b (0.07%).

Libya's NOC lifted the force majeure on oil fields and ports, excluding facilities where militants are still present, after the Libyan National Army's leader Khalifa Haftar said on Sept.18 in a public broadcast that a blockade on oil exports, effective since Jan. 18, would be lifted immediately.

The lifting of NOC's force majeure could result in the return of up to 1.1 million b/d of crude oil that Libya had been pumping to the market before the blockade was imposed, marking a significant increase over the 100,000 b/d pumped during the blockade.

The return of Libyan crude could add to the woes of the OPEC+ coalition, which has been struggling with non-compliance issues from members as it tapers its oil output cuts to 7.7 million b/d from August onwards, from the 9.7 million b/d cut mandated from May through July.

While the OPEC+ meeting held on Sept. 17, during which Saudi energy minister Prince Abdulaziz bin Salman secured commitments from compliance laggards to compensate for their excess production, boosted market sentiment, traders are now concerned over the prospect of additional oil from Libya amid weak demand.

"The market can ill afford more crude hitting the market," ANZ analysts said in a Sept. 21 note. They reasoned that "The resurgence in COVID-19 infections around the world has seen many governments halt the easing of restrictions".

Stephen Innes, chief global markets strategist at AxiCorp , echoed a similar sentiment in a Sept. 21 note where he expressed concern over the possibility that wider-sweeping lockdowns will weigh down oil demand, with the coronavirus pandemic entering the unchartered territory of the winter months. "Winter months could prove to be one of the bitterest obstacles of them all," Innes said in the note.

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.
Author:Margaret Volkova
Tags:Asia, PP, PE, LLDPE, crude and gaz condensate, propylene, ethylene, petrochemistry, Libya, USA.
Category:General News
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