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Crude prices higher following OPEC+ meeting

September 22/2020

MOSCOW (MRC) -- Crude oil future prices ticked higher during the mid-morning trade in Asia Sept. 18, as the markets continued to price in a commitment from the OPEC to ensure that the members adhere to the mandated production cuts, reported S&P Global.

At 11:25 am Singapore time (0325 GMT), ICE Brent November crude futures were trading at USD43.51/b, up 21 cents/b (0.48%) from the Sept. 17 settle, while the NYMEX October light sweet crude contract was at USD41.16/b, up 19 cents/b (0.46%).

The uptick in the crude oil futures market comes after the Brent and WTI markers surged USD1.04/b and USD0.73/b, respectively, on Sept. 17 from the Sept. 16 settle following the OPEC+ meeting.

During the meeting, Saudi Arabia's energy minister Prince Abdulaziz bin Salman cracked down on the OPEC+ compliance laggards and secured commitments from them to compensate for their overproduction.

According to a technical report by the Joint Ministerial Monitoring Committee, countries that exceeded their quotas from May-August have a cumulative 2.375 million b/d of compensation cuts due, which are required to be completed by the end of the year - an extension of the previous end-September deadline.

The UAE, which has thus far struggled to meet the production quotas, has already signaled that it will ensure compliance through ADNOC, which announced a 25% cut in November term volumes.

Referencing the upward trajectory of the crude oil futures market, Stephen Innes, Chief Global Markets Strategist at AxiCorp said in Sept. 18 note, "[Prior to the OPEC+ meeting], traders had already been nudging prices higher expecting a resolute messaging around quota compliance and compliance catch up where necessary so that global inventories continue to fall. [However during the meeting] OPEC+ over-delivered on both fronts as Prince Abdulaziz pulled no punches but instead came out swinging."

Innes, however, warned that while crude oil has recovered from its recent lows, demand fundamentals remain weak and the short-term trajectory of the market is sensitive to the pace of global economic recovery.

"The bearish builds in (oil) products unequivocally suggest weak demand, pointing to the market's Achilles heel, and could ultimately prove short-term price capper," he said in the note.

As MRC informed earlier, in early May, 2020, Abu Dhabi National Oil Company (ADNOC) began a gradual restart of its Ruwais oil refinery complex after a scheduled maintenance shutdown. The Ruwais complex, which has capacity of 835,000 barrels per day, was shut down early this year, the ADNOC spokesman said.

And in late July 2019, ADNOC said its Ruwais refinery west cracker was offline for maintenance.

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, ADNOC, United Arab Emirates (UAE), Russia, USA.
Category:General News
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