Crude oil futures extend uptrend on vaccine reports, US political developments

MOSCOW (MRC) -- Crude oil futures rose during the mid-morning trade in Asia Nov. 24, extending overnight gains, as the market remained supported by the progress of a third potential COVID-19 vaccine and co-operation from US President Donald Trump in moving President-elect Joe Biden's transition forward, reported S&P Global.

At 10:51 am Singapore time (0251 GMT), ICE Brent January crude futures were up 35 cents/b (0.76%) from the Nov. 23 settle at USD46.41/b, while the NYMEX January light sweet crude contract was 37 cent/b (0.86%) higher at USD43.43/b.

The contracts had risen 2.45% and 1.51% respectively on Nov. 23 on reports that a Oxford-AstraZeneca vaccine had an average efficacy of 70%, with analysts noting it was cheaper to produce and distribute than two other vaccines that have also released promising results in recent days.

"With the earlier Pfizer and BioNtech and the Moderna vaccine announcements, and the recent AstraZeneca and Oxford vaccine announcement, we can see the end (of the pandemic) in sight," OANDA senior market analyst Jeffrey Halley told S&P Global Platts Nov. 24.

Stephen Innes, chief global market strategist at Axi, echoed the same sentiment, saying in a Nov. 24 note: "Oil markets are rightly jumping for joy as the AstraZeneca delivery is a big deal, as most of the developed world will be able to immunize its most at-risk population to COVID by the spring and likely the entire community by mid-year."

Meanwhile, uncertainty in the US political arena eased after Government Services Administration chief Emily Murphy gave the approval to begin the formal transition process to a Biden presidency, with Trump also expressing his amenability to following "the initial protocols" in a tweet.

Halley noted that this portended well for the oil market as "it looks like Trump has conceded the election unofficially, paving the way for the Biden administration, which is perceived to be much more trade friendly. Biden also plans to nominate Janet Yellen as Treasury secretary, and this news has been positive for oil and the broader risk assets.

"Greater international trade equals greater growth and greater growth equals more oil consumption, which means higher prices. That is the simple equation that we are going to see in Asia today," Halley 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% 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

Q8Oils and INNIO engage in long-term partnership for lubricating Jenbacher gas engines

Q8Oils and INNIO engage in long-term partnership for lubricating Jenbacher gas engines

MOSCOW (MRC) -- Q8Oils has signed a long-term global partnership agreement with INNIO Jenbacher to supply lubricants for all Jenbacher gas engines that operate on non-natural gas, including biogas, sewage gas and landfill gas, said Hydrocarbonprocessing.

Combining the technical expertise and knowledge of INNIO Jenbacher and Q8Oils will further enhance the durability and efficiency of Jenbacher type 2, 3, 4 and 6 engines. Both companies strongly believe that this partnership will bring strong new benefits to gas engine owners and operators.

Effective 1st October, this new agreement strengthens the close and successful cooperation between INNIO Jenbacher and Q8Oils in recent years. Both companies are intensely cooperating already, and the launch of their new co-branded oil worldwide is planned for Q1 2021.

Frank Rouwens, General Manager Q8Oils, commented: "Today, we are delighted to announce the partnership between Q8Oils and INNIO Jenbacher, which brings together Q8Oils’ leading technology in gas engine lubrication and Jenbacher’s world class expertise in designing and building gas engines. Our companies will focus on developments related to biogas and other non-natural gases. We are very happy with this partnership which fits well with our mutual drive to focus research and new developments on sustainable solutions that support the environment and help make our planet a healthier place."

Andreas Kunz, CTO, INNIO commented: “We are pleased to build on our co-engineering working relationship with Q8Oils. We have been working closely with Q8Oils in recent years to combine INNIO’s product and combustion knowledge with Q8Oils’ competence in lubricant and additive development. This has resulted in the development of a new lubricant that is designed to meet the demanding requirements of non-natural gas combustion. This lubricant is developed specifically for our reliable and highly efficient Jenbacher Type 2, 3, 4 and 6 engines that operate on non-natural gases. Furthermore, it is specified to give greater protection to engine components and to maximize customer value. The partnership agreement will be a key driver in continuing to improve the performance of our non-natural gases engines in an environmentally friendly way."

Q8Oils has been developing solutions related to the challenges that arise from lubricating gas engines in its in-house research laboratories for 35 years. Through continuous innovation, it provides gas engine owners with lubricants which deliver the cleanest engines and longer oil drain intervals, helping to reduce operational costs.

As MRC informed earlier, 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.

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 density 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

Thailand crude imports jump in Oct as refiners replenish light-end product stocks

MOSCOW (MRC) -- Thailand imported 792,600 b/d of crude and condensate in October, a 50.8% jump from a year earlier, with demand for light sweet crude from the US and Nigeria picking up sharply after the restart of the country's 215,000 b/d Rayong refinery, reported S&P Gllobal.

The country's crude oil imports in October rose by 46.8% year on year to 725,673 b/d, while condensate imports more than doubled to 66,927 b/d from 31,263 b/d in the same month a year earlier, according to data released Nov. 23 by the customs department.

A sharp monthly increase in Thailand's refinery feedstock imports from its major light sweet crude suppliers including the US and Nigeria stood out, with state-run refiner and upstream company PTT indicating that the country is in need of replenishing some light and middle distillates stocks after refinery runs fell sharply late in the third quarter.

Thailand received 35,357 b/d of crude oil from the US in October, up 90.2% from 18,586 b/d imported in September, the data showed. Imports from Nigeria also more than doubled to 62,251 b/d from 24,655 b/d in September.

In the first 10 months, Thailand imported 92,951 b/d from the US, up 33% from the same period a year earlier, placing the North American producer in the top three supplier list for the year.

"Looking at the WTI-Dubai and WTI-Brent spreads, light sweet US crude may not be as competitive as it was in the previous 2-3 years, but we believe [crude import] diversification should be maintained over the longer run," a trading manager at PTT told S&P Global Platts.

In mid-October, PTT's subsidiary IRPC Public Co. Ltd. competed repairs to its 215,000 b/d Rayong refinery and restarted units that were shut in early September due to a fire, a company official told Platts previously.

The operating rate of the Rayong refinery averaged 88% over the first half of 2020, down from the 94% in H1 2019, IRPC said in an operations update on Oct. 14.

With the units back online, however, market participants expect operating rates at the facility to be steadily increased to at least 80% of capacity, matching levels prior to the fire.

"Light crude and condensate are essential these days for petrochemical feedstock naphtha output ... demand for petrochemicals for plastic, as well as hygiene-related chemical production is rising rapidly during the [coronavirus] pandemic," a plant operation manager at IRPC said.

In addition, PTT Global Chemical plans to raise run rates at its 280,000 b/d refinery in Map Ta Phut to over 90% in December, from 80%-90% in November, due to some improvement in margins, a source close to the matter said Nov. 24.

However, it remain uncertain how far the country's refinery run rates would need to be increased as domestic transportation fuel demand remains fragile, industry and refinery sources said.

The ongoing political protests and fresh coronavirus outbreaks could emerge as challenges to Thailand's gasoline demand in the near term, sources added.

Reflecting the headwinds, driving activity in Thailand has been on a downtrend since the end of August and was seen at 7% below baseline levels Nov. 22, mobility data from Apple showed.

Thailand produced 120,677 b/d of crude oil in the first nine months of this year, down 3.1% year on year, with major output coming from Sirikit (29,553 b/d, 0.4% higher year on year), Erawan (24,656 b/d, down 0.1% year on year) and Tantawan (17,984 b/d, down 15.5% year on year).

Its condensate output between January and September declined 16.6% year on year to 85,529 b/d, with the main production coming from Erawan (40,758 b/d, down 21% year on year) and Pailin (12,544 b/d, dropping 28.2% from a year ago), according to data released Nov. 12 by the Energy Policy and Planning Office.

Domestic crude production data for January-October is scheduled to be released next month.

As MRC informed before, PTTGC might start up the newly constructed cracker in Map Ta Phut, Thailand this December, 2020. The company kickstarted the project in early 2018 as part of PTTGC’s USD4.5 billion projects to “retrofit” its Map Ta Phut site. The new cracker operates on flexible feeds, primarily to utilize the surplus naphtha from its refinery. The unit has an annual capacity of 500,000 tons/year of ethylene and 261,000 tons/year of propylene.

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

Momentum for hydrogen transit grows

MOSCOW (MRC) -- In conjunction with European Hydrogen Week, global power leader Cummins Inc. shared new research revealing that more than half of the United Kingdom (UK) commuters would be willing to travel to work on a train or bus powered by hydrogen to lower their carbon footprint and reduce emissions and nearly half of commuters in Belgium and Germany expressed the same view, said Hydrocarbonprocessing.

This new data was obtained through a survey of 6,000 respondents in Belgium, Germany and the United Kingdom in October 2020. "It is encouraging to see that citizens and governments across Europe are prioritizing the climate and understand that investment in hydrogen technologies is a path to improve the environment and fuel economic recovery from the impact of COVID-19,” said Amy Adams, vice president of Fuel Cell & Hydrogen Technologies at Cummins. “With both the EU and the UK pledging to be carbon-neutral by 2050, there is, in short, real appetite from policymakers and citizens to make a collective difference. Hydrogen is a key part of Cummins’ portfolio of solutions to help our customers succeed and as a path toward zero emissions."

The survey results demonstrate positive attitudes towards clean technology alternatives for public transport, with about 40% consumers in Belgium, Germany and the UK willing to pay GBP1 or EUR1 more for their daily commute in order to lower their carbon footprint.

48% of British citizens expressed that low-carbon technologies are important for the UK’s economic recovery from COVID-19. In addition, more than 40% of citizens in Belgium and Germany agreed that low-carbon technologies are important for their country’s economic recovery plans.

When asked about buying or renting a car powered by hydrogen, over a quarter of respondents in Belgium and the UK reported concerns with the upfront cost. Less than 20 percent of consumers in Germany, the UK and Belgium were also deterred by the limited amount of hydrogen refuelers available. Furthermore, one in five UK citizens believe that it will take 20-30 years for there to be more cars powered by hydrogen fuel on the road than gas-powered cars, and nearly a quarter believe this will never happen. A third of consumers in Germany and more than a quarter in Belgium agreed.

Fortunately, European consumers are willing to switch to more sustainable public transport – and this technology is available now. For example, hydrogen trains are an effective solution for more sustainable rail networks in Europe. With the right commercial technologies in place, consumers can lower their carbon footprints without facing additional costs.

As MRC informed earlier, Chemical railcar traffic in North America continued to strengthen during the week ended 21 November. Weekly volume totaled 44,843 carloads, up 5.8% year-over-year (YOY) and up 0.6% sequentially, according to data released on 25 November by the Association of American Railroads (AAR). On a four-week basis, volume was up 2.4% from 2019 and down 0.8% from 2018 (chart). By contrast, volume during the four weeks ending 14 November was up just 1.3% from 2019 and down 4.3% from 2018.

As MRC informed earlier, 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.

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 density 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

Shell may permanently shut Louisiana refinery next week

MOSCOW (MRC) -- Royal Dutch Shell may begin the permanent shutdown of its 211,146 bpd Convent, Louisiana, refinery early next week, people familiar with plant operations said, said Hydrocarbonprocessing.

Shell announced on Nov. 5 the refinery, located 57 miles (92 km) west of New Orleans, was to close after the company failed to find a buyer amid the COVID-19 pandemic. A Shell spokesman did not reply to a request for comment.

The Convent refinery is the first U.S. Gulf Coast refinery to permanently close because of the pandemic-related decline in demand for refined products. Eight other North American plants have been idled or targeted for shutdowns.

The coronavirus pandemic cut fuel demand by up to 30% earlier this year, and even as economies recover, the outbreak will likely reduce global demand by 4.7 MMbpd over the next five years, analysts have said. Three U.S. oil refineries have shut already this year because of weak demand for jet fuel, diesel and gasoline amid a slowing economy.

In August, Calcasieu Refining idled its 135,500-bpd Lake Charles, Louisiana, facility, citing weak margins from falling demand. Marathon Petroleum Corp has said it will not restart production at its refineries in Martinez, California, and Gallup, New Mexico. Shell this month halved its crude processing capacity at its 500,000 bpd Pulau Bukom plant in Singapore. Plants in the U.S. and Europe are considering converting some facilities to produce biofuels.

U.S. refineries in August ran at 78.8% of their 18.6 MMbpd capacity, according to the U.S. Energy Information Administration, down from 83.1% in March.

As MRC informed before, Royal Dutch Shell plc. said earlier this month that its petrochemical complex of several billion dollars in Western Pennsylvania is about 70% complete and in the process to enter service in the early 2020s. The plant's costs are estimated to be USD6-USD10 billion, where ethane will be transformed into plastic feedstock. The facility is equipped to produce 1.5 million metric tons per year (mmty) of ethylene and 1.6 mmty of polyethylene (PE), two important constituents of plastics.

Ethylene and propylene are feedstocks for producing 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, exluding producers" inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC