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MOSCOW (MRC) -- Oil prices retreated
Dec. 1 amid uncertainty surrounding an expected extension of OPEC+ production
quotas after the group delayed its meeting to Dec. 3, reported S&P Global.
NYMEX January WTI
settled 79 cents lower at USD44.55/b, and ICE February Brent fell 46 cents to
USD47.42/b.
OPEC is hoping a couple of days away from the market's glare will
allow cooler heads to prevail and rescue a deal to extend production cuts that
analysts say is needed to prevent an oil glut in the months
ahead.
Disagreements - at times vehement, according to sources - between
Saudi Arabia and the UAE over how quotas will be managed and enforced led to a
breakdown of formal OPEC talks on Nov. 30, and a meeting with Russia and other
partners scheduled for Dec. 1 has now been pushed back by two days.
"The
latest spat between Saudi Arabia and the UAE raises the risk of taking the
energy market off the path towards rebalancing," OANDA senior market analyst
Edward Moya said in a note. "The UAE resistance to delaying the output hike was
not expected and will likely force OPEC+ to have production discussions become a
monthly event."
NYMEX January RBOB settled 2.12 cents lower at
USD1.2204/gal, and January ULSD was down 2.41 cents at
USD1.3473/gal.
OPEC delegates had said the framework of a three-month
extension favored by kingpin Saudi Arabia and several other members had been
reached, but a deal has been held up by the UAE's insistence that quota-busting
countries be held to account with so-called compensation cuts that have to date
been largely unenforced, except on itself.
Without an extension
agreement, the OPEC+ curbs are scheduled to ease from the current 7.7 million
b/d 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.
Demand outlooks remain under pressure from the threat
of renewed lockdowns as COVID-19 continued to surge across the
US.
California Governor Gavin Newsom warned Nov. 30 he may need to take
"drastic actions," including issuing stay-at-home orders, to curb swelling cases
numbers
In New York, Governor Andrew Cuomo on Nov. 30 ordered hospitals
to take emergency precautions in the face of rising cases loads and suggested
the state could again implement lockdown measures similar to those this past
spring.
Second-month RBOB futures settled Dec. 1 at a 1.22 cent/gal
premium to the front-month contract, opening the first significant contango in
that part of the forward curve since June 30. In contrast, the second-month RBOB
settled in a 5.30 cent/gal backwardation compared with front month on the same
date in 2019.
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. |
