MOSCOW (MRC) -- Crude oil prices surged during the mid-morning trade in Asia Nov. 9, shadowing the movement in other risk assets, as uncertainty subsided over the US presidential election result, reported S&P Global.
At 10.21 am Singapore time (0221 GMT), ICE Brent January crude futures were up 99 cents/b (2.51%) from the Nov. 6 settle to USD40.44/b, while the NYMEX December light sweet crude contract was USD1/b (2.69%) higher at USD38.14/b.
The markers rose 3.98% and 3.77% in the week ended Nov. 6 as indications that the OPEC+ alliance could extend its current production cuts outweighed the uncertainty surrounding the the US elections. With Democrat Joe Biden declared winner of the 2020 race to the White House, oil resumed its uptrend.
"We are seeing sort of a sunshine effect caused by the provisional Biden victory, which is causing oil to rally this morning in line with the other risk assets and a weaker dollar," OANDA senior market analyst Jeffrey Halley told S&P Global Platts Nov. 9.
"The markets believe that the Biden administration will be more positive for international trade and could bring the US back into that framework, lifting global economic growth and providing a boost to global oil consumption," he added.
Strong economic data from China was adding to the uptrend, with customs data showing October exports were 11.4% higher on the year, Halley said.
AXI chief global market strategist Stephen Innes said in a Nov. 9 note: "Oil is trading a bit higher this morning in line with broader risk assets and a slightly weaker dollar as Joe Biden was declared the President, while on the data front, both the US jobs number and China's resilient exports number released over the weekend paint a better picture for the global growth outlook than expected."
However both analysts noted that market fundamentals remained bearish, with Innes adding that "what matters for oil is the pandemic and not the US election results."
With coronavirus infections in the US setting daily new records and the lockdowns in Europe likely to derail economic recovery, the outlook for oil demand remains bleak.
Against this gloomy backdrop, supply-side concerns were also heightened after Libya's National Oil Corp. reported Nov. 7 that Libya had doubled its oil output to 1 million b/d in the just over two weeks since its rival factions agreed to a peace deal on Oct. 23.
"Given the bearish fundamentals in the market, I am taking the rise in oil prices this morning with a pinch of salt. As far as I am concerned, oil remains a sell-on-rally asset for me," Halley said.
As MRC informed previously, 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).
ccording 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.
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