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Crude oil futures edge lower on EIA data, pandemic concerns

November 23/2020

MOSCOW (MRC) -- Crude oil futures ticked lower during morning trade in Asia Nov. 19, after data from the Energy Information Administration showed a small build in US commercial crude inventories, and as concerns over the uninhibited progression of the coronavirus pandemic festered in the market, reported S&P Global.

At 10:26 am Singapore time (0226 GMT), ICE Brent January crude futures were down 9 cents/b (0.20%) from the Nov. 18 settle at USD44.25/b, while the NYMEX December light sweet crude contract was down 18 cents/b (0.43%) at USD41.64/b.

Both ICE Brent January contract and December WTI contract rose on Nov. 18 after Pfizer and BioNtech said that a final analysis of clinical-trial data showed that their vaccine was 95% effective, and that they would submit an application for US regulatory authorization in the coming days.

However, the uptrend in oil prices was stymied by Nov. 18 data from the EIA, which showed that, in the week ended Nov. 13, US commercial crude inventories rose 770,000 barrels to 489.48 million barrels and were now 6.4% above the five-year average.

EIA data was more bullish than the Nov. 17 data from the American Petroleum Institute, which had shown a 4.174 million-barrel build in crude inventories in the same week, while analysts surveyed by S&P Global Platts had expected crude stocks to rise by only 100,000 barrels.

EIA data was also indicative of unimproved fundamentals in downstream markets as it showed that US gasoline inventories rose 2.61 million barrels to 227.97 million barrels in the week ended Nov. 13, with weekly product supplied for gasoline, EIA's proxy for demand, sliding 500,000 b/d to 8.26 million b/d, the lowest since the week ended Jun. 12.

The one positive from the report was a 5.22 million-barrel draw in distillate inventories to 144.07 million barrels, with distillate demand climbing 170,000 b/d to 4.23 million b/d.

At 10:26 am Singapore time, the NYMEX December RBOB contract was trading 0.52 cent/gal (0.45%) lower than the Nov. 18 settle at USD1.1577/gal and the NYMEX December ULSD contract was up by 0.17 cent/gal (0.13%) at USD1.2657/gal.

Meanwhile, concerns over the coronavirus pandemic were exacerbated by media reports that New York City's public schools will close temporarily to stem the rise in COVID-19 infections, after the city recorded a seven-day average positive rate of 3%.

Market analysts lamented the unabated rise in infection numbers in major US cities could culminate in increased restrictions during the holiday season.

ANZ analysts said in a Nov. 19 note: "[A vaccine] approval can't come quickly enough for the oil market, with the outlook for demand darkening amid ever increasing restrictions. A survey by GasBuddy says that only 35% of Americans will be taking to the roads during the Thanksgiving holiday. This is down from 65% last year."

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).

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, excluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
Author:Margaret Volkova
Tags:Asia, Europe, PP, PE, crude and gaz condensate, propylene, HDPE, ethylene, petrochemistry, Interchemgroup, Borealis, BP Plc, LyondellBasell, Sabic, Total Petrochemicals, Russia, USA.
Category:General News
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