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Crude settles higher as COVID-19 vaccine boosts outlooks

November 25/2020

MOSCOW (MRC) -- Crude oil prices settled at multimonth highs Nov. 23 as demand outlooks improved amid reports of progress on a third COVID-19 vaccine, reported S&P Global.

NYMEX January WTI settled 64 cents higher at USD43.06/b, and ICE January Brent was up USD1.10 at USD46.06/b.

Oil prices moved higher overnight after European drug maker AstraZeneca announced its COVID-19 vaccine was 70% effective in late-stage trials. The news comes on the heels of the Pfizer and BioTech submitting a request Nov. 20 for Emergency Use Authorization of their COVID-19 vaccine to the US Food and Drug Administration. Those companies announced earlier in November their vaccine was more than 90% effective in late-stage trials.

"This is the third Monday in a row with positive vaccine news," OANDA senior market analysts Edward Moya said. "That's pretty much driving the trade."

Front-month WTI settled at the highest since Aug. 26, while front-month Brent futures were last higher March 5.

Brent futures saw additional upward pressure following an overnight missile attack on a Saudi Aramco distribution station north of Jeddah that caused a fuel tank to catch fire.

Yemen's Iran-backed Houthi rebels claimed responsibility for the attack, in a statement made by the militia's spokesperson on Twitter. Houthi general Yahya Sarea announced the distribution station was targeted with a Quds-2 missile.

The Jeddah incident follows an attempted attack Nov. 11, when Houthis directed two unmanned boats carrying explosives toward Aramco facilities in Jazan on the Red Sea.

Front-month Brent settled at a 2 cent/b premium compared with the second-month contract, flipping the front end of the forward curve to backwardation for the first time since June 26.

NYMEX December RBOB settled 2.88 cents higher Nov. 23 at USD1.2040/gal, and December ULSD was up 2.42 cents at USD1.3105/gal.

The IHS Markit US manufacturing PMI climbed to 56.7 for November, up from 53.4 in October and beating market expectations of a modest pullback in the index. The increase suggests that US economic recovery is extending into the fourth quarter even as rising COVID-19 cases force state and local governments to impose increasingly restrictive lockdown measures.

Still, gasoline cracks continued to weaken. The ICE New York Harbor RBOB crack against Brent fell to around USD4.27/ in afternoon trading, on pace for the lowest close since early August.

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:Europe, PP, PE, crude and gaz condensate, PP random copolymer, propylene, HDPE, ethylene, medicine, petrochemistry, BASF, Borealis, BP Plc, LyondellBasell, Sabic, Total Petrochemicals, Russia, USA.
Category:General News
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