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MOSCOW (MRC) -- The trajectories of the
ICE Brent futures and NYMEX crude futures were in opposite directions during the
mid-morning trade in Asia Nov. 27, as the latter underwent a price correction,
not having fallen as much as the former during the trading session on Nov. 26,
with both markers further weighed down by heightened concerns over the pandemic
situation in the US, reported S&P
Global.
At 11:36 am Singapore time (0336 GMT), ICE Brent January
contract was up 10 cents/b (0.21%) from the Nov. 26 settle at USD47.90/b, while
the NYMEX January light sweet crude contract was down 70 cents/b (1.53%) at
US45.01/b.
Both the ICE Brent January contract and the NYMEX January
contract had fallen 2.39% and 0.57% on Nov. 26 to settle at USD47.80/b and
USD45.71/b, respectively, as vaccine optimism had fizzled out, and near-term
pandemic considerations had resurfaced.
NYMEX crude futures, having
resisted as steep a fall as Brent futures on Nov. 26, buckled during pressure
from a gloomy demand outlook brought about by the unabated spread of coronavirus
in the US.
According to the COVID Tracking Project, virus-related
hospitalizations in the US reached a new record for the sixteenth consecutive
day on Nov. 25, and the daily death toll was the highest since early
May.
"The market is getting somewhat worried over how the pandemic
situation is playing out in the US. We have significant number of cases but no
action is being taken," David Lennox, resource analyst at Fat Prophets, told
S&P Global Platts on Nov. 27.
"While inaction is helping demand at
the moment, it is like waiting for a firecracker to go off once you have lit the
wick - at some point we might see drastic measures and that is what the concern
is all about."
Meanwhile, the market is also jittery in the run-up to the
Dec. 1 OPEC and non-OPEC Ministerial Meeting, which is seen as the next
risk-point for oil prices. The meeting is expected to provide a definite
statement over whether the alliance will roll-over the current 7.7 million b/d
production cuts into next year. However, even before the meeting, the market has
already priced in a three-to-six month extension of the cuts.
The
decision to maintain the current production cuts will be complicated by the
surge in oil prices seen in November. There has been market talk over fissures
within the OPEC+ alliance, with UAE reportedly reconsidering whether membership
is in its long-term interest. Further, Iraq deputy Prime Minister Ali Allawi
said on Nov. 23 that the alliance needs to take into account the economic and
political conditions of the members before imposing "one size fits all"
production quotas.
"I do think they will extend the current production
cuts as the economic climate remains weak, but it will not be an easy decision
and there will be a lot of squabbles during the meeting," said
Lennox.
Stephen Innes, chief global market strategist at Axi, concurred,
as he cautioned in a Nov. 27 note that while an extension of the cuts was still
expected to be the default outcome, the rollover might not be an incremental
positive, and a failure to extend cuts would hit market negatively.
As
MRC reported
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, exluding producers" inventories as of 1
January, 2020). Supply increased exclusively of PP random copolymer. |
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