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Oil steady as market eyes coronavirus hit to demand

September 28/2020

MOSCOW (MRC) -- Oil prices were little changed on Friday but on track for a weekly fall on concerns that a global resurgence of COVID-19 infections will constrain fuel demand, while the likely return of exports from Libya will add to supply, reported Reuters.

Brent crude was down 2 cents at USD41.92 a barrel by 0113 GMT, while US West Texas Intermediate (WTI) crude was 3 cents firmer at USD40.34.

Brent is heading for a drop of nearly 3% this week, while U.S. crude is on track for a decline of almost 2%. Both benchmarks are also on track for a monthly decline, which would be the first for Brent in six months.

"The prospect of the return of Libyan barrels to the market is adding to the bearish sentiment," RBC Capital Markets said in a note. "However, we think the return of the barrels will be slow and subject to reversal based on the volatile security and political picture."

An oil tanker was loading a cargo on Thursday from one of three Libyan terminals that were reopened in recent days and more cargoes are expected to be lifted in the coming days.

Beyond that "crude prices will have difficulty rallying, on a structural basis, unless refining margins lead the path higher," RBC said.

In the United States, which has the highest death toll from the COVID-19 crisis and is the world's biggest oil consumer, unemployment claims unexpectedly rose last week suggesting an economic recovery is flailing and pushing down fuel demand.

US crude, gasoline and distillate inventories all fell last week, according to government data on Wednesday.

Still, US fuel demand remains in the doldrums as the pandemic constrains travel. The four-week average gasoline demand last week was 9% below a year earlier, government data showed earlier in the week.

In other parts of the world, daily increases of coronavirus infections are hitting records and new restrictions are being put in place that will likely limit demand for travel and fuel.

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, USA.
Category:General News
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