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MOSCOW (MRC) -- Oil futures
settled lower Nov. 30 as OPEC delegates finished a first day of negotiations
without a deal on whether to extend crude production quotas into the new year,
reported S&P Global.
NYMEX
January WTI settled 19 cents lower at USD45.34/b, and ICE January Brent finished
the session down 59 cents at USD47.59/b.
The OPEC+ alliance at one point
seemed close to a decision to maintain its collective 7.7 million b/d in output
cuts through at least March to buttress oil prices against the impact of rising
COVID-19 infections, but fissures have emerged as fatigue among many countries
to rein in so much of their crude production has grown, and talks so far have
failed to achieve a watertight consensus.
NYMEX December RBOB settled
3.31 cents lower Nov. 30 at USD1.2489/gal, and December ULSD was down 2.46 cents
at USD1.3559/gal.
Year-ahead WTI futures settled in a 2 cents/b
backwardation compared with the front-month contract, but Brent forward curve
fell deeper into contango with the year-ahead contract settling at a 45 cent/b
premium to front month.
OPEC held its formal meeting Nov. 30, intending
to clinch a deal ministers would then hammer out the following day with its nine
non-OPEC partners. Delegates said the framework of a cut extension for three
months had been reached, but the UAE, which has been wavering in its commitment
to OPEC, has yet to take a position, endangering the negotiations.
"It is
becoming apparent that you are not having everyone fall in line here, and
rightfully so; the Asian economic recovery is strong," OANDA senior market
analyst Edward Moya said. "If the recovery continues like it is, (a quota
extension) is basically giving US shale producers the greenlight to win back
market share."
Chinese refinery runs hit a fresh all-time high of 14.15
million b/d in October, National Bureau of Statistics data showed Nov.
25.
Even an agreement among OPEC is not certain to be ratified by the
non-OPEC members. Russia has expressed a desire to gradually increase quotas,
while Kazakhstan wants to see the cuts rolled back as scheduled, sources told
S&P Global Platts after preliminary consultations among some members were
organized Nov. 29.
Without an extension agreement, the OPEC+ curbs are
scheduled to ease to 5.8 million b/d from January, which many analysts have said
could overwhelm the market given the recent surge in crude production from
quota-exempt Libya.
"We calculate the market surplus could be as high as
1.5 million-3 million b/d in H1 2021 if it doesn't extend cuts," ANZ analysts
said in a note Nov. 30.
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. |
