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Crude settles lower as COVID-19 surge threatens demand outlooks

October 27/2020

MOSCOW (MRC) -- Oil futures settled lower Oct. 26 as demand outlooks came under pressure amid a surge in COVID-19 cases in the US and Europe, reported S&P Global.

NYMEX December WTI settled USD1.29 lower at USD38.56/b, and ICE December Brent was down USD1.31 at USD40.46/b. Front-month WTI last settled lower Oct. 2.

Oil demand outlooks have dimmed as a return to broader social lockdowns appear more likely amid steadily rising coronavirus infections.

In the US, the seven-day moving average of new infections climbed to 68,954 on Oct. 25, an all-time high, according to data from The COVID Tracking Project.

In Europe, Italy has encouraged people to avoid travel before Nov. 24, Spain has approved a state of emergency and imposed a national nighttime curfew, and France has recorded more new cases in the last three days than it registered during its March-May lockdown.

NYMEX November RBOB settled down 2.73 cents on Oct. 26 at USD1.1116/gal, and November ULSD was 2.95 cents lower at USD1.1218/gal.

The ICE New York Harbor front-month RBOB crack versus Brent was holding at around USD5.60/b midafternoon, up slightly from the previous session but still near six-week lows.

"Crude prices continue to slide as surging coronavirus cases in both Europe and the Americas will trigger lockdowns that will cripple economic activity and downgrade crude demand forecasts," OANDA senior market analyst Edward Moya said. "It is hard to get optimistic about the crude demand outlook due to COVID-19."

Against this backdrop, rising Libyan crude output added further pressure to prices.

At the end of last week, Libya's National Oil Corp. said production would reach 800,000 b/d in two weeks and 1 million b/d within four weeks, as the company lifted force majeure on loadings from two of its largest export terminals.

On Oct. 26, the state-owned company resumed production at its El Feel oil field, the last of its idled facilities, marking the end of a 10-month interruption in exports.

Libya was Africa's fourth-largest crude producer in 2019, but in January the self-styled Libyan National Army led a port blockade as it battled against the country's UN-backed Government of National Accord.

Top producers in the deepwater Gulf of Mexico said they have already started evacuating oil and gas platforms and shutting in production ahead of Hurricane Zeta, which is expected to trigger more oil and gas volumes to come offline.

Nearly 16% of oil volumes from the US Gulf already are shut in, 293,656 b/d turned off, and about 6% of natural gas output, 162.57 MMcf/d, is offline, according to the US Bureau of Safety and Environmental Enforcement.

Only 10 platforms have been evacuated thus far, BSEE said Oct. 26, with more underway.

As MRC wrote earlier, BP and Equinor confirmed they are shutting in production on their platforms, while Chevron, BHP and others said they are evacuating some personnel and considering decisions on production reductions.

We remind that Chevron Phillips Chemical, part of Chevron Corporation, still has not lifted force majeure on its polyethylene (PE) products after assessing the impact of Hurricane Laura to its Gulf Coast PE operations. The force majeure circumstances were declared on 1 September, 2020. CP Chem operates a 420,000 mt/year high-density polyethylene (HDPE) plant in Orange, Texas, and an 855,000 mt/year cracker in Port Arthur. The company plans to minimize the impact of the event and return to full PE deliveries as soon as possible.

Ethylene and propylene are feedstocks for producing 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.
Author:Margaret Volkova
Tags:Europe, PP, PE, LLDPE, crude and gaz condensate, PP random copolymer, propylene, HDPE, ethylene, petrochemistry, BP Plc, Chevron, Chevron Phillips, Equinor, Russia, USA.
Category:General News
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