Crude oil futures inch higher despite US crude build

MOSCOW (MRC) -- Crude oil futures ticked up during mid-morning trade in Asia Oct. 8, clawing back some of the overnight losses, as the impact of a build in US crude inventories was negated by the support offered to the market by draws in product inventories and escalating supply disruptions in Norway and the US Gulf of Mexico, reported S&P Gllobal.

At 11.23 am Singapore time (0323 GMT), ICE Brent December crude futures were up 13 cents/b (0.31%) from the Oct. 7 settle to USD42.12/b, while the NYMEX November light sweet crude contract was up 5 cents/b (0.13%) at $40/b. Both international crude markets had dived 1.55% and 1.77% to settle at USD41.99/b and USD39.95/b respectively on Oct. 7, when the cancellation of US stimulus negotiations had rattled the market.

The uptick came despite data from the US Energy Information Administration showing that, due to increased US production and a slowdown in exports, US commercial crude inventories jumped 500,000 barrels to 492.93 million barrels in the week ended Oct. 2.

The impact of the crude inventory build was cushioned by indications of improved downstream demand, as the EIA data also showed that, in the same week, US distillate inventories fell 960,000 barrels to 171.8 million barrels and US gasoline inventories fell 1.44 million barrels to 226.75 million barrels, 0.4% lower than the five-year average gasoline inventory.

Stephen Innes, chief market strategist at AXI, in an Oct. 8 note said: " Prices received some support from a draw in product stocks in the DOE data, which offset small crude build."

In addition, escalating supply disruptions in Norway and the US Gulf has also buoyed oil prices.

With 330,000 b/d of oil equivalent production already offline in Norway, the Lederne union in Norway said that it will extend its strike on Oct. 11 to include two platforms at the flagship Ekofisk field, two satellite fields that feed the Oseberg crude stream, and Kristin, a satellite of the Asgard crude stream, S&P Global Platts reported on Oct. 7.

"Around 330,000 barrels a day have already been lost to the strike, and (the Lederne union's latest move) is expected to add about 170,000 more," Innes said.

Meanwhile, in the US Gulf of Mexico, nearly 1.49 million b/d of crude production and 1,335 MMcf/d of natural gas production -- 80.42% and 49.26% of total offshore output, respectively, -- was offline, according to the US Bureau of Safety and Environmental Enforcement, as producers in the region braced for the Hurricane Delta.

Lastly, hopes of fiscal relief continued to lift market sentiment. US President Donald Trump, after shutting down discussions over a US stimulus package till after the elections, said he supported passing stand-alone relief provisions instead.

ANZ analysts in an Oct. 8 note said: "House leader Nancy Pelosi signaled openness to such a bill, resulting in a risk on tone enveloping markets."

As MRC informed earlier, global oil refiners reeling from months of lackluster demand and an abundance of inventories were 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 previous 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.
MRC

More than 90% of Gulf oil offline as LNG plants, refineries prep for hurricane

MOSCOW (MRC) -- More than 90% of crude oil production in the US Gulf of Mexico went offline in advance of Hurricane Delta as LNG plants and refineries shuttered or hunkered down in advance of the storm's anticipated landfall on Oct. 9 in southwestern Louisiana, reported S&P Global.

Delta is targeting the same area already devastated by Hurricane Laura in late August, so the major refineries near Lake Charles, Louisiana remained closed. However, US Gulf Coast LNG producers were shutting down or making emergency preparations on Oct. 8 ahead of Delta now that most of the Gulf's oil and gas flows have already come offline.

More than 1.69 million b/d of US Gulf of Mexico crude production and 1.675 Bcf/d of natural gas output were shut in Oct. 8, 91.53% and 61.82% of total offshore output, respectively, according to the US Bureau of Safety and Environmental Enforcement. BSEE said 279 of the Gulf's platforms and rigs were evacuated, almost 45% of the Gulf's operating facilities offshore.

The offshore Gulf of Mexico is home to roughly 1.9 million b/d of crude production capacity, according to the US Energy Information Administration.

Sempra Energy's Cameron LNG plant in southwestern Louisiana is again shuttering after recently shipping its first cargoes since August, when the facility was previously shut down from Laura, the company said Oct. 8.

However, Cheniere Energy's Sabine Pass LNG facility and Freeport LNG in Texas said they are activating emergency response plans, but maintaining operations for now.

"We will staff Sabine Pass with a limited ride-out crew to safely manage operations and will provide updates as appropriate following the storm," Cheniere spokeswoman Jenna Palfrey said on Oct. 8.

Delta is forecast to strengthen into a major Category 3 hurricane and then weaken back into a still-powerful Category 2 storm before landfall. A bevy of tropical storms and hurricanes have disrupted oil and gas operations in the Gulf this year for what could end up as the most active Atlantic storm season in recorded history, potentially surpassing the record-setting season in 2005.

Shell, BP and Chevron said they took the extra steps of shutting in production at all of their operated Gulf platforms and facilities.

"As a precautionary measure, Shell has shut in production at all nine of its assets and has evacuated all personnel," Shell said in an Oct. 8 statement. "All drilling operations have been safely paused."

Shell also said it will closely track potential impacts at its Louisiana refineries in Convent and Norco, and its chemicals plant in Geismar.

BP said Oct. 6 it would shut in production and evacuate all four of its offshore platforms: Thunder Horse, Atlantis, Mad Dog and Na Kika. Likewise, Chevron shut in production and evacuated crews from all of its Gulf platforms.

ExxonMobil said it evacuated its Hoover platform in the Gulf, but that its Baton Rouge refining complex is continuing to operate.

Crude exports from Louisiana are feeling the impact as well. A LOOP spokesperson said Oct. 7 that the offshore port's marine terminal had suspended operations in advance of the storm.

Kinder Morgan's NGPL pipeline system made a force majeure declaration on Oct. 8 because of the advancing storm, and the connected Sabine Pass LNG plant saw its feedgas nominations fall by about 500 Mmcf to 3.078 Bcf/d on the same day because of the pipeline closure.

Hurricane Delta's projected path previously shifted west away from New Orleans and toward Lake Charles, Louisiana, meaning fewer refineries are currently in the direct path of the storm. Still, a combined 2.4 million b/d of operating capacity is in the path of Delta in Texas and Louisiana.

Area refiners have yet to report any shutdowns, but there is still time ahead of the storm's landfall to do so if necessary.

Roughly 813,500 b/d of capacity in the path of the storm remains offline from previous hurricanes, including the Phillips 66 and Citgo Petroleum refineries near Lake Charles.

Hurricane season extends through the end of November.

As MRC informed earlier, hurricane Delta is on track to reach the US Gulf Coast (USGC) between High Island, Texas, northeast of Houston, and Grand Isle, Louisiana, south of New Orleans, Friday. Located north of Mexico’s Yucatan Peninsula Wednesday afternoon, the storm is forecast to strengthen as it heads north toward the heart of the US petrochemical industry.

We remind that strengthening hurricane Delta forced the closure of 29.2% of offshore crude oil production in the US-regulated northern Gulf of Mexico by midday Tuesday, regulator US Bureau of Safety and Environmental Enforcement (BSEE).

Ethylene and propylene are feedstocks for producing 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.
MRC

Trinseo and Ferholz to launch R-PS suitable for the dairy industry

MOSCOW (MRC) -- Trinseo, a global supplier of material solutions and manufacturer of plastics, latex binders, and synthetic rubber, announced today that it has developed a new grade of post-consumer recycled polystyrene, together with the German packaging manufacturer Fernholz, said the company.

The latest Form Fill Seal (FFS) formulations incorporate 40% r-PS, depending on final application, thanks to Trinseo’s unique technology, which embeds the material into the polymerization process using solvent processes.

"With r-PS technology, we have developed a process that will help the plastics industry conserve resources and reduce oil consumption,” said Nicolas Joly, Vice President Plastics & Feedstocks at Trinseo. “We are very pleased to work with Fernholz as our collaboration partner to jointly respond to consumer and market expectations, offering companies a tangible solution for more sustainable packaging."

Fernholz is working closely with Trinseo to incorporate r-PS into sheet production, which can be used for food packaging applications in compliance with food safety requirements. To date, full-scale field tests for processing, migration, sensory testing and other common parameters have revealed that r-PS can be readily processed on classic FFS machines, eliminating the need for costly equipment upgrades.

"The feedback we have received from customers so far has been overwhelmingly positive,” said Uwe Fernholz, Managing Director at Fernholz. “The market has been waiting for a solution like this for a long time. As a result of the positive feedback, we are very confident that this breakthrough in recycled packaging made from polystyrene will help the value chain to meet its sustainability goals."

The new material grade is already being trialed by several European dairy companies, some of whom have already launched new products using the recycled polystyrene food packaging. As one of the few materials with PCR content available in large quantities, Trinseo has the capacity to supply the dairy industry and related sectors with several thousand tons of the material. Furthermore, due to the recycling technology involved in the process, mono-material packaging, though preferable, is not mandatory. The lid or label can be safely separated as part of the recycling process.

According to ICIS-MRC Price report, October prices of Russian PS continued their upward trend. A shortage of material remained in the domestic market. Traders said Nizhnekamskneftekhim reduced its offer prices for this month's PS purchases to 40%. October prices of Nizhnekamskneftekhim's GPPS grew for the agreed with buyers quantities to Rb89,000-95,000/tonne CPT Moscow, including VAT, whereas HIPS - to Rb93,000-99,000/tonne CPT Moscow, including VAT.

Trinseo is a global materials company and manufacturer of plastics, latex and rubber. Trinseo's technology is used by customers in industries such as home appliances, automotive, building & construction, carpet, consumer electronics, consumer goods, electrical & lighting, medical, packaging, paper & paperboard, rubber goods and tires. Formerly known as Styron, Trinseo completed its renaming process in 1Q 2015. Trinseo had approximately USD3.8 billion in net sales in 2019, with 17 manufacturing sites around the world, and approximately 2,700 employees.
MRC

SABIC to shut its PP plant in Netherlands for maintenance

MOSCOW (MRC) -- SABIC Europe, a European affiliate of Saudi Basic Industries Corporation (Sabic), is due to conduct a maintenance work at its polypropylene (PP) copolymer plant in Geleen, the Netherlands, according to NCT with reference to sources close with the matter.

The planned maintenance is slated to start in early October and last around 2 weeks.

The company could not be reached for comments at the time of publication, meanwhile.

The plant has a production capacity of around 350,000 tons/year of PP copolymer.

As MRC reported earlier, SABIC Europe has shut its No. 6 cracker in Wilton (UK) for a scheduled maintenance. The flaring was registered on 29 September. The turnaround at this cracker which has an annual ethylene capacity of 865,000 tonnes and propylene capacity of 415,000 tonnes will be conducted during approximately 75 days.

According to MRC's ScanPlast report, 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.

Saudi Basic Industries Corporation (Sabic) ranks among the world's top petrochemical companies. The company is among the world's market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.
MRC

Prices of European PE fell for CIS markets in October

MOSCOW (MRC) -- October contract price of ethylene was settled in Europe down by EUR10/tonne from the previous month. However, some European producers agreed to cut export prices for polyethylene (PE) more than the monomer price decrease for deliveries to CIS markets in October, according to ICIS-MRC Price Report.

Negotiations over October prices of European PE began at the end of last week. All market participants said European producers decided to reduce the export prices of propylene polymers, and in some cases the price decrease is recorded more than the decrease in the price of propylene in the region.

Deals for October shipments of low density polyethylene (LDPE) were discussed in the range of EUR830-900/tonne FCA, whereas last month's deals were done in the range of EUR840-960/tonne FCA.

Deals for October shipments of high density polyethylene (HDPE) were discussed in the range of EUR820-900/tonne FCA, whereas last month's deals were done in the range of EUR830-910/tonne FCA.

Many buyers reported an increase in the supply of polyethylene from a number of European producers, although some positions of PE remain limited, in particular, black PE100.
MRC