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MOSCOW (MRC) -- Crude futures were
rangebound during mid-morning trade in Asia Oct. 19, as fundamentals in the oil
markets were stable, reported S&P
Global.
At 10.20 am Singapore time (0220 GMT), ICE Brent December
crude futures were down 13 cent/b (0.3%) from the Oct. 16 settle to USD42.880/b,
while the NYMEX November light sweet crude contract was down 14 cents/b (0.34%)
at USD40.74/b. Both international crude markets had dipped 0.39% and 0.20% to
settle at USD42.92/b and USD40.88/b, respectively, on Oct. 16, after the Energy
Information Association's Oct. 15 data showed that US crude exports had fallen
to the lowest in 14 months in the week ended Oct. 9.
Amid steady
fundamentals, market analysts said that during the week ending Oct. 23, the
crude oil price trajectory will be tethered to news flow concerning the
coronavirus pandemic.
The coronavirus pandemic continues to threaten
global economic recovery, with Italy announcing tightened restrictions to curb
the spread the virus on Oct. 18, and Ireland set to do the same later Oct. 19.
Just last week, the UK, France and Germany had also adopted more restrictive
measures in their battle against the pandemic.
Stephen Innes, chief
market strategist at AXI, said in an Oct. 19 note: "The coronavirus pandemic
will continue to dominate attention as case numbers rise in Europe and the US
[and] as governments move to impose mobility restrictions. And with a trajectory
for COVID-19 infections skewed firmly upwards at this juncture, it indeed raises
doubts about the robustness of the anticipated economic recovery and thus the
prospects for oil demand growth."
Against this gloomy backdrop, the
market continues to pin its hopes on the possibility that the OPEC+ alliance
will decide against easing their production cuts by almost 2 million b/d as
scheduled from 2021 onwards, even after the UAE's energy minister Suhail
al-Mazrouei said on Oct. 13 that there are no such plans to do so at the
moment.
Barkindo, when presented with the possibility of extended cuts at
the Energy Intelligence Forum on Oct. 15 said: "A lot of variables may be
reintroduced, but we will focus on how to best assist this market to accelerate
the recovery to restore the stability, and also to sustain the
stability...Whatever decision that will be taken is to ensure that the recovery
in 2021 will be at a favorable pace, will gather momentum in this Q4 and will
accelerate."
Market analysts believe that given the bleak demand outlook,
and the return of Libyan oil to the market, it is not advisable for OPEC+ to add
more oil to the market.
"The toxic combination [of the sustained spread
of the coronavirus pandemic and the return of Libyan barrels] makes the
scheduled tapering on Jan. 1, 2021, very unlikely. Frankly, adding oil to the
market at this juncture, with demand so fragile, is a flat-out bad idea if the
group's real intentions are to stabilize and support," AXI's Innes
said.
As MRC informed earlier,
global oil demand is forecast to peak by around 2040 because transport-fuel
demand will decline steeply and economic growth will slow in the
post-coronavirus world, the Institute of Energy Economics, Japan, said in its
annual IEEJ Outlook 2021 on Oct. 15.
We remind that global oil demand may
have already peaked,
according to BP's latest long-term energy outlook, as the COVID-19 pandemic
kicks the world economy onto a weaker growth trajectory and accelerates the
shift to cleaner fuels.
Earlier this year, BP said the deadly coronavirus
outbreak could cut
global oil demand growth by 40 per cent in 2020, putting pressure on Opec
producers and Russia to curb supplies to keep prices in check.
And in
September 2019, six world's major petrochemical companies in Flanders, Belgium,
North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the
creation of a consortium to jointly investigate how naphtha or gas steam
crackers could be operated using renewable electricity instead of fossil fuels.
The Cracker of the Future consortium, which includes BASF, Borealis, BP,
LyondellBasell, SABIC and Total, aims to produce base chemicals while also
significantly reducing carbon emissions. The companies agreed to invest in
R&D and knowledge sharing as they assess the possibility of transitioning
their base chemical production to renewable electricity.
Ethylene and
propylene are feedstocks for producing polyethylene (PE) and polypropylene
(PP).
According to MRC's ScanPlast report,
Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight
months of 2020, up by 5% year on year. Shipments of all ethylene polymers
increased, except for linear low desnity polyethylene (LLDPE). At the same time,
PP shipments to the Russian market reached 767,2900 tonnes in the eight months
of 2020 (calculated using the formula - production minus exports plus imports -
and not counting producers' inventories as of 1 January, 2020). Supply increased
exclusively of PP random copolymer. |
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