Oil prices rise on vaccine bullishness despite COVID-19 surge

MOSCOW (MRC) -- Crude oil prices rose Nov. 20 on news that the first COVID-19 vaccine doses could be available by the end of the year, but the reaction was tempered by rising coronavirus cases in North America and Europe and the fear of family gatherings during the upcoming US Thanksgiving holiday further escalating the pandemic, reported S&P Global.

On the final day of trading for the NYMEX WTI December contract, front-month NYMEX WTI rose 52 cents to settle at USD42.42/b for the week while ICE January Brent jumped 76 cents to settle at USD44.96/b.

"Crude prices are set for a third consecutive weekly gain on vaccine optimism, but the near-term outlook will likely prevent any significant moves higher as the likelihood of more lockdowns grows," said Edward Moya, senior market analyst with OANDA.

"A lot of Americans may ignore the CDC recommendation to cancel Thanksgiving plans and that will keep the energy markets prepared for further and longer lockdowns across the US throughout December," he added, citing the recent advisory from the US Centers for Disease Control and Prevention.

While there is longer-term optimism on crude prices and demand, and front-month NYMEX WTI hit its highest settled price since Sept. 2, WTI futures contracts are still sitting just below USD43.50/b in 11 months.

Pfizer and its German partner BioNTech applied Nov. 20 for emergency approval to start delivering COVID-19 vaccine doses by the end of December, although a much larger rollout would drag out well into 2021.

The announcement comes shortly after they said the vaccine appears 95% effective at preventing mild to severe COVID-19 disease in a large, ongoing study. The move starts the clock for the approval process at the US Food and Drug Administration.

Moderna's similar vaccine is progressing with claims of nearly 95% effectiveness as well.

However, the daily COVID-19 death count in the US has risen near 2,000 people again for the first time since May, daily caseloads are at all-time highs, and unemployment claims are back on the rise. Some European countries are making more progress in slowing the rising cases, but only after implementing stricter economic lockdowns that hurt oil demand.

And, in both the US and the EU, stimulus package talks remain on hold, including opposition from Poland and Hungary in the EU.

As for products, NYMEX December RBOB increased 1.27 cents to settle at USD1.1752/gal while December ULSD was up 1.56 cents at USD1.2863/gal.

In the meantime, there is ongoing optimism that the OPEC+ group will opt to extend its current production cuts into 2021. However, OPEC is still seeing production volumes rise as Libya ramps up output following a recent peace deal among warring factions.

But there is some fear that OPEC+ could instead decide to reduce its cuts if crude prices keep rising ahead of its December meeting, said Craig Erlam, also of OANDA.

"The vaccine news has been a gamechanger for the outlook. No longer is OPEC+ the only major upside risk," Erlam added.

A combination of OPEC+ and vaccine optimism has helped crude prices move higher, although they've yet to break out more meaningfully, said Bjornar Tonhaugen, Rystad Energy's head of oil markets.

But that stronger pricing jump could come in 2021, he said, when demand finally begins to rebound.

"Until the end of this year, global oil demand will stay suppressed owing to the growing extent of global curfews and lockdowns, with Europe still the epicenter for restrictions," Tonhaugen added.

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.
MRC

MOSCOW (MRC) -- The chemical industry's focus on sustainability has continued to strengthen despite disruptions caused by COVID-19, reported Chemweek with reference to Dow CEO Jim Fitterling.

Speaking on 18 November at the Chemical Industry Financial Outlook and Sustainability Forum and Awards 2020, held online by Chemical Week, he said the industry has continued to develop its strategy and to set new targets for reducing plastic waste and carbon dioxide emissions. However, the transition to sustainability has a cost, and smart policy-making will be key to encouraging the necessary investment, he added.

"I think a lot of people, their natural reaction would be we've been so focused on COVID that we forgot about plastics and we forgot about the climate," Fitterling observed. "My sense is that isn't the case. We've seen much stronger engagement in Europe, much stronger engagement here (in the US) around the issues."

The pandemic has drawn attention to the importance of plastics in daily life and the role they play in safety, security, and protection, but that hasn't taken attention from the problems of plastic waste and climate change, he noted. "I'd say we haven't slowed down at all. If anything, we've doubled down on those issues, and we raised some new targets for the industry."

Every brand owner in the value chain, from producer to retailer, is "consumed" with the question of how to become more sustainable, he said, and coming to terms with the cost of doing so. "It's driving us to look at technologies that maybe we thought were too expensive. And I think one of the mindset shifts that has happened is everybody's got their head around the fact that doing all this is not going to be cheaper than the way we do it today."

Fitterling highlighted the positive role of government in addressing cost. "How do we put the right policies in place--the right energy policies, carbon policies, recycling policies -- that not only push us to new technology, but also create a market opportunity? Because what we really want is to be able to unleash the capital markets on these challenges," he said. "The cash is there, …but if the policies aren't smart, nobody will just throw the money in and take the risk."

There has to be a clear path to a return on investment, he noted. "That challenge I think has become much more in focus. There's a lot of engagement on the public side, on the financial services side, and on the business side on how to address that. The consumer's there, but now all the other parts of the equation are coming together.

At the same time, Fitterling pointed to the consequences of policy overreach in the realm of energy decarbonization. Pushing alternative energy sources and electrification of the economy without addressing reliable baseload supply and the limitations of the power grid leads has led to rolling brownouts in California and increased coal-burning in Germany, he noted. "Even within Dow, we've made a big move towards alternative power as part of our climate change initiatives, but I'll hit a wall at about 15% renewable energy because it is not available and dispatchable 24/7 like we need to run big, energy-intensive assets," he said.

"We have to be smarter. And when people talk about an all-of-the-above energy policy, what they mean is you can't start cutting off things that are making you low-cost, dependable, and reliable until you've got replacement technologies to come in that have that same dependability and reliability," he said. "One of the realities is, we're going to need natural gas as a bridge fuel for a long, long time, and we're going to need oil for a long, long time as well."

Fitterling said Dow has reduced its carbon dioxide (CO2) footprint by 15% over the last ten years, and the company is aiming for another 15% reduction by 2030. By 2050, the company intends to be carbon neutral. To help reduce plastic waste, Dow will ensure that everything it makes that goes into packaging is either reusable or recycled by 2035.

"Those packages need to be 100% reusable and recyclable, and they need to be able to be collected, and so we're working with people like The Recycling Partnership, Closed Loop, Circulate Capital, and others to really showcase how that can be done," said Fitterling. "I think we'll look back and say this tough period of time that we were in didn't dissuade anybody from these targets-- it actually gave us some time to take a step back, and some breathing room to reformulate and plan, and if anything it's going to accelerate these moves."

As MRC wrote earlier, in September, 2020, Dow and Luhai, an integrated waste management company located in Xiamen, China, announced their collaboration to give plastics waste collected by Luhai a second life, thereby increasing the circularity of plastics in China. The agreement is in line with Dow’s new sustainability targets to Stop the Waste by enabling one million metric tons of plastic to be collected, reused or recycled through its direct actions and partnerships by 2030.

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.

The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.
MRC

MOSCOW (MRC) -- Eni and the Hera Group, through its subsidiaries Eni Rewind and Herambiente, have today signed, in the presence of the Mayor of Ravenna Michele de Pascale, an agreement to establish a joint venture which, by pooling the technical-management know-how of the two companies, will create a multifunctional platform for the pre-processing and processing of special waste in the Ravenna industrial area, according to MarketScreener.

The initiative aims to make a concrete contribution to the structural shortage of special waste management facilities in Italy and to maximise the recovery of materials and energy.

In particular, the platform, the authorisation process of which will begin in 2021, will manage up to 60 thousand tonnes/year of waste produced by environmental and production activities, including those in the area, from a circular perspective and in line with the European directives of the 'Circular Economy Package' implemented in Italy last September. The multi-purpose platform will be equipped with the latest technologies and built on a part of the 'Ponticelle' site owned by Eni Rewind, near the industrial zone and the port of Ravenna. In relation to the development and operation of the plant, Eni Rewind will be responsible for the procurement process of solid and liquid waste processing services and Herambiente will operate the plant.

Mayor of Ravenna Michele de Pascale said 'This is an important agreement to transform a formerly abandoned industrial area through the implementation of a technologically advanced project. This virtuous project demonstrates our leadership in the circular economy, which is important for the economic development of the city and will also be the subject of an in-depth study by the City Council. Today, a first fundamental collaboration between two important industry groups, Eni and Herambiente, has been put in place in our city, bringing with it significant benefits for employment and economic growth for the community in the future'.

Paolo Grossi, CEO of Eni Rewind commented 'The agreement with Herambiente aligns with the Eni Ponticelle project, which aims to regenerate an industrial zone according to the principles of circular economy. In Ponticelle, we are finishing the environmental works an the area where, in the coming months, Eni will build a photovoltaic park and a plant for the biological treatment of the land, with an adjoining analysis and research laboratory. The Ponticelle project is emblematic of our operating model. It is sustainable and circular, and was structured following constructive dialogue with local stakeholders'.

Andrea Ramonda, CEO of Herambiente said 'Growth and innovation are in Herambiente's DNA and alliances with qualified partners such as Eni, meet these values perfectly. The new platform, which will replace the existing one, integrates and further improves the already ample plant equipment dedicated to waste produced by companies and is perfectly aligned with our recently renewed mission. It will offer sustainable and innovative solutions to companies and communities creating value and new resources'.

As MRC reported earlier, in September 2020, Italy’s Eni proposed building bio-refineries in Abu Dhabi, according to the energy group’s chief executive Claudio Descalzi. The Italian oil major has been focusing on developing new clean technologies in recent years as it steps up preparations for a decarbonized future.

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.
MRC

MOSCOW (MRC) -- Malaysia’s state energy firm Petronas said it is stepping up investments in hydrogen as part of a global push to produce carbon-free energy, even as the firm expands its portfolio in LNG and renewable energy, said Hydrocarbonprocessing.

"The trajectory for moving towards hydrogen is really picking up space,” chief executive Tengku Muhammad Taufik Tengku Aziz said during the APEC CEO Dialogues. "It is typically the same customer base in emerging Asia, who are making more pronounced noises and desire to create a market for hydrogen," he added.

Petronas, the world’s fourth-largest exporter of LNG, this month announced its goal to become a net zero emitter of greenhouse gases by 2050 and also plans to increase its investments in renewable energy. Tengku Muhammad Taufik said, however, the challenge with hydrogen is in managing the supply chain and logistics.

Petronas is working through Memorandum of Understanding and partnerships with technology players to ensure it has the right capital and expertise to pursue the hydrogen agenda, he added.

During the dialogue, Japan’s Ministry of Economy, Trade and Industry (METI) said it has already formulated its hydrogen strategy, but prices need to fall to the same level as LNG within the next two decades.

"We believe hydrogen has one of the most important roles in achieving carbon neutrality, and is especially important to decarbonize sectors which are hard to electrify,"” said Takeshi Soda, METI director of oil & natural gas division.

The economic trauma caused by the coronavirus pandemic has pushed energy companies to increase investment in renewables, hydrogen and other low carbon alternatives, but fossil fuels will be their dominant business for the foreseeable future, industry executives say.

As MRC informed earlier, BASF and PETRONAS will close a butanediol (BDO) plant at their joint venture site in Kuantan, Malaysia, in the first quarter of 2021. BASF PETRONAS Chemicals (BPC) intends to shut down the unit, which produces BDO and derivatives, by March 2021, the companies said, due to “significant” overcapacity in the region due to new investments by competitors into coal-fired production units.

As MRC informed earlier, BASF and Petronas were considering jointly investing around EUR1bn (USD1.34bn) to produce specialty chemicals in Malaysia.

However, Petronas and German chemical company BASF said they had scrapped a proposed joint venture to develop a specialty chemicals production facility in Malaysia. The proposed partnership was terminated because both parties couldn't agree on the "terms and conditions" for the project in the southern state of Johor, the companies said in a joint statement.

As MRC informed earlier, BASF had put a project to build a petrochemicals complex in India worth up to USD4 billion on hold due to the economic uncertainty caused by the COVID-19 pandemic.

We remind that Russia's output of chemical products rose in September 2020 by 6.7% year on year. At the same time, production of basic chemicals increased by 6.1% year on year in the first nine months of 2020, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-September output. Last month's production of primary polymers decreased to 852,000 tonnes from 888,000 tonnes in August due to shutdowns in Tomsk, Ufa and Kazan. Overall output of polymers in primary form totalled 7,480,000 tonnes over the stated period, up by 16.4% year on year.
MRC

MOSCOW (MRC) -- ENEOS Corporation (formerly known as JXTG Nippon Oil & Energy) is planning to take its larger naphtha cracker in Kawasaki off-line on 1 December 2020 for repairment after a technical issue reported at the butadiene separation unit last week, reported CommoPlast.

The cracker is currently operating at 95% capacity and would slowly reduce the run rates to completely shut down by the beginning of December.

The cracker with an annual capacity of 515,000 tons/year of ethylene, 300,000 tons/year of propylene, and 105,000 tons/year of butadiene would be shut for a month.

The company’s smaller cracker at the same location is not affected by the issue.

As MRC informed before, Eneos Corporation has restarted its fluid catalytic cracker (FCC) unit following a planned outage. The company resumed operations at the unit on August 31, 2020. The unit was shut for maintenance in end-April, 2020. Located at Kawasaki, Japan, the FCC unit has a propylene capacity of 150,000 mt/year.

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.

Japan's largest refiner JXTG Nippon Oil & Energy was renamed ENEOS Corporation on 25 June, 2020, as part of a wider re-organization of the parent company JXTG Holdings. The move, which also involved renaming the parent company to ENEOS Holdings upon approval at its annual shareholders meeting in June 2020, comes as it strives to be a more comprehensive energy and materials company under its 2040 vision announced in May, 2019. JXTG Holdings was formed as a result of a merger between JX Holdings and TonenGeneral in April 2017. This followed the establishment of JX Holdings as a result of the merger between Nippon Oil and Nippon Mining Holdings in April 2010.
MRC