MOSCOW (MRC) -- Oil futures settled mixed Dec. 8 after a directionless session as the market pitted the rising threat of pandemic lockdowns against forecasts of tighter oil markets in 2021, reported S&P Global.
NYMEX January WTI settled 16 cents lower at USD45.60/b, while ICE February Brent was up 5 cents at USD48.84/b.
The US Energy Information Administration, in its monthly Short Term Energy Outlook released Dec. 8, revised its outlook for crude prices sharply higher from the month prior, citing an OPEC+ decision to partially extend production quotas into 2021.
The EIA expects Brent crude prices to average USD48.50/b in 2021, up USD1.91 from its November forecast of USD46.59/b.
WTI crude prices are expected to average at USD45.75/b next year, up USD1.51 from November's forecast of USD44.24/b.
The EIA cited the OPEC+ decision to boost production by just 500,000 b/d in January, instead of a scheduled 1.9 million b/d, as the reason for the upward revision. The move will lead to a tighter oil market in 2021, especially during the first quarter, the EIA said. As a result, the EIA now forecasts global oil inventories will draw on average 1.8 million b/d throughout the first quarter, an upward revision of 1 million b/d from November's outlook.
NYMEX January RBOB settled 1 point higher Dec. 8 at USD1.2559/gal, and January ULSD climbed 75 points to settle at USD1.4067/gal.
But the threat of more pandemic lockdowns capped upward price movement.
"The big cities in the US are getting hit hard again by the virus and that could translate into longer lockdowns that will deliver a bigger hit to fuel demand over the next couple of months," OANDA senior market analyst Edward Moya said in a note. "Vaccine implementation across the US and Europe will be key for how quickly the crude demand outlook improves next year."
Washington Governor Jay Inslee on Dec. 8 announced that the state would be extending its lockdown measures for three weeks beyond an initial Dec. 14 expiration as the state battles rising case numbers.
Global coronavirus cases rose by 533,000 to nearly 68 million on Dec. 7, according to data from John Hopkins University. Some 200,000 of the new cases were in the US and 153,000 were across Europe. The UK began administering COVID-19 vaccines on Dec. 8.
In the US, which has yet to approve a vaccine, the seven-day moving average of coronavirus-caused deaths hit a fresh all-time high of 2,171 on Dec. 7, according to data from The Covid Tracking Project.
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 PE and PP.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.
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