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Oil climbs as Hurricane Zeta takes more US output offline

October 29/2020

MOSCOW (MRC) -- Energy prices settled higher Oct. 27 as US Gulf of Mexico operators shut in crude production ahead of Hurricane Zeta, tightening supply outlooks, reported S&P Global.

NYMEX December WTI settled USD1.01 higher at USD39.57/b and ICE December Brent climbed 74 cents to USD41.20/b.

Roughly half of all the oil and gas production from the US Gulf of Mexico was shut in Oct. 27 ahead of Hurricane Zeta, which is expected to make landfall in southeastern Louisiana.

An estimated 914,811 b/d of crude production and 1,500 MMcf/d of natural gas production was shut in, reflecting 49.45% and 55.35% of US Gulf output, respectively, according to the US Bureau of Safety and Environmental Enforcement. About 25% of the Gulf's platforms and rigs, or 157 facilities, have been evacuated thus far, BSEE said, with more underway.

Chevron, Shell, BP, BHP, Murphy Oil and Equinor all confirmed they've shut down platforms and production ahead of the storm. BP and Chevron count among those shutting in all of their operated platforms.

NYMEX November RBOB settled 3.18 cents higher at USD1.1434/gal and November ULSD was up 3.559 cents at USD1.1577/gal.

"Crude prices are rallying as Hurricane Zeta triggers further disruptions to crude output in the Gulf of Mexico," OANDA senior market analyst Edward Moya said in a note. "Risk aversion took a break today and that gave oil a chance to stabilize a bit before the lower boundaries of its two-month trading range."

Zeta, which weakened to a Tropical Storm after making landfall on Mexico's Yucatan Peninsula Oct. 26, was expected to regain hurricane status later on Oct. 27 and make a second landfall late Oct. 28 near southeastern Louisiana, according to the National Hurricane Center.

The current path of the hurricane targets roughly 2.7 million b/d of refining capacity, mostly in Louisiana.

Refiners continue to monitor the storm, based on their hurricane readiness and response plans. Decisions to slow or shut down plant depending on the intensity, location and timing of landfall of the storm are likely to be made within the next 24 hours, sources familiar with operations at several refineries said.

The Platts USGC unleaded 87 gasoline front-month crack against WTI climbed to USD6.504/b, up 48 cents from the session prior and the strongest since Oct. 14. The USGC ULSD crack against WTI jumped 51 cents to a 12-session high USD7.088/b.

As MRC informed previously, at least five Louisiana oil refineries in the path of Tropical Storm Zeta plan to remain operating as it makes a US landfall. Oil and gas producers evacuated offshore production platforms and shut wells as the storm moved across the Gulf of Mexico. Zeta could strike the Gulf Coast between Louisiana and Alabama at or near hurricane intensity, forecasters said.

Thus, Exxon Mobil Corps 517,700 barrel-per-day (bpd) Baton Rouge, refinery, Royal Dutch Shell Plcs 227,400 bpd Norco and 211,146 bpd Convent, Louisiana, refineries are proceeding with normal operations. Exxons Baton Rouge plant is about 110 miles (177 km) northwest of the forecast path while Shells Convent and Norco refineries are 78 miles and 54 miles northwest of the latest storm track. Exxon and Shell are monitoring the storm, spokes people said. Shell also said it is prepared to take action as appropriate.

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:PP, PE, LLDPE, crude and gaz condensate, PP random copolymer, propylene, ethylene, petrochemistry, BP Plc, Chevron, Equinor, Exxon Mobil, Shell, Russia, USA.
Category:General News
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