MOSCOW (MRC) -- Oil prices settled at the lowest level since early June on Oct. 29 as demand outlooks dimmed in the face of rising coronavirus cases that have sparked broad lockdowns in Europe, reported S&P Global.
NYMEX December WTI settled USD1.22 lower at USD36.17/b, and ICE December Brent was down USD1.47 at USD37.65/b.
Energy prices turned sharply lower in overnight trading after France and Germany both announced nationwide lockdowns on Oct. 28 in a bid to stem a rising tide of new infections, stoking concerns that more restrictions could be coming to areas with similar coronavirus trajectories.
In the US, the seven-day moving average of new coronavirus infections climbed to a fresh all-time high 74,096 on Oct. 28, according to data from The COVID Tracking Project.
Front-month WTI settled below the 200-day moving average, a key technical indicator, for the first time since Oct. 2. Implied volatility, a measure of downside risk in the market, for front-month WTI climbed to 57.88% Oct. 29, the highest since late May.
NYMEX November RBOB settled 2.99 cents lower at USD1.0515/gal and November ULSD settled down 2.58 cents at USD1.0884/gal.
But oil prices pulled off session lows in early US trading following more bullish than expected US economic data.
US Commerce department data showed third-quarter GDP surged 33.1%, or USD1.64 trillion, to USD21.16 trillion. The increase exceeded market expectations and nearly erased a USD2.04 trillion GDP slide in the second quarter.
Further buoying market sentiment, US weekly unemployment claims fell 40,000 to 751,000 in the week ended Oct. 24, US Labor Department data showed.
"The US data was just the excuse used to pare losses, but really energy traders wanted to defend the lower boundaries of the trading range that has been in place since June," OANDA senior market analyst Edward Moya said in a note. "Lockdown headlines will continue to dictate how bad the crude demand outlook crumbles."
Front-month WTI and Brent last settled lower on June 1 and May 29, respectively.
US energy prices also saw some support from production shut ins due to Hurricane Zeta, which made landfall on the Louisiana coast Oct. 28.
As of midday Oct. 29, the storm had shut in an estimated 1.57 million b/d of crude production reflecting 84.8% of US Gulf output, according to the US Bureau of Safety and Environmental Enforcement. The Category 2 storm also caused disruptions at Shell's 227,400 b/d Norco Refinery, PBF Energy's 190,000 b/d Chalmette Refinery and potentially others, but damages were limited and the restart processes have begun, the companies said.
Outsized declines for Brent futures narrowed the ICE WTI-Brent spread to around minus USD1.50/b in afternoon trading, testing levels last seen in early April.
As MRC informed earlier, producers took 85% of the US Gulf's crude oil flows ahead of Hurricane Zeta and, now that the storm has passed, some Louisiana refineries are beginning to restart after suffering from the widespread power outages throughout the New Orleans area.
We remind that Royal Dutch Shell plc. said in October, 2020, that its petrochemical complex of several billion dollars in Western Pennsylvania is about 70% complete and in the process to enter service in the early 2020s. Currently under construction, the plant is in Beaver County, about 48 km northwest of Pittsburgh, and will be self-sustained with its natural gas power plant and water treatment facility. The plant’s costs are estimated to be USD6-USD10 billion, where ethane will be transformed into plastic feedstock. The facility is equipped to produce 1.5 million metric tons per year (mmty) of ethylene and 1.6 mmty of polyethylene (PE), two important constituents of plastics.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC