MOSCOW (MRC) -- Crude oil rose during the mid-morning trade in Asia Nov. 12, as indications that OPEC+ may deepen production cuts in 2021 kept the market afloat even as a rally seen due to a promising Pfizer and BioNTech vaccine ran out of steam, reported S&P Global.
Now At 10:54 am Singapore time (0254 GMT), ICE Brent January crude futures were up 43 cents/b (0.98%) from the Nov. 11 settle to USD44.23/b, while the NYMEX December light sweet crude contract was up 44 cents/b (1.06%) at USD41.89/b. Both markers had risen 0.44% and 0.22% on Nov. 11 to settle at USD43.80/b and USD41.45/b, respectively.
Optimism over OPEC+ intervention continued to fuel the uptrend in prices, after Algerian energy minister Abdelmajid Attar, who holds OPEC's rotating presidency, said that the OPEC+ alliance's current 7.7 million b/d in output cuts could be maintained into 2021 instead of being eased as originally planned, or even extended.
At a Gas Exporting Countries Forum ministerial roundtable convened ahead of the body's formal meeting Nov. 12, Attar reassured the market that the OPEC+ alliance remains committed to preventing another slide in oil prices, and said that doing so "includes the possibility of extending today's production adjustment into 2021 as well as deepening this adjustment should market conditions so require."
Vandana Hari, CEO at Vanda Insights, however, told S&P Global Platts on Nov. 12, "There have been some hints from the OPEC+ regarding the status of the production cuts. But the market is still awaiting definitive statements and the alliance is still keeping its cards close to its chest. It is possible right now, with the recent rise in crude prices, that the alliance may now be more dovish on supply."
Hari also added that the rally built upon vaccine hopes was coming to an end, as "indicated on Nov. 11 alone, when Brent traded well above $45/b at during the intraday trading period but the settlement was much lower than the intradays highs."
Hari surmised that until further development, the trajectory of the prices will once again depend on the progression of the coronavirus pandemic in the coming winter months.
In the background, COVID-19 infections have surged in the US and much of Europe remains under some degree of lockdown, forcing the OPEC to turn more bearish on the global oil demand outlook.
In its monthly report released Nov. 11, the OPEC revised down its projections of global demand by 280,000 b/d for 2020 and by 580,000 b/d for 2021.
The alliance said: "The oil demand recovery will be severely hampered and sluggishness in transportation and industrial fuel demand is now assumed to last until mid-2021. "
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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