MOSCOW (MRC) -- Crude oil futures continued their upward trajectory during mid-morning Asian trade Dec. 11 as vaccine momentum intensified following an endorsement of the Pfizer-BioNTech vaccine by the US Food and Drug Administration advisory committee, and crude demand from India and China also supporting sentiment, reported S&P Global.
At 10:58 am Singapore time (0258 GMT), the ICE Brent February contract was up 15 cents/b (0.3%) from the Dec. 10 settle to USD50.41/b, while the January NYMEX light sweet crude contract was up 22 cents/b (0.47%) at USD47/b. Both markers had closed at nine-month highs on Dec. 10, with the ICE Brent February contract rising 2.84% to settle at USD50.25/b and the January NYMEX light sweet crude contract rising 2.77% to settle at USD46.78.
The risk-on sentiment in the market intensified after a committee of experts on the Vaccines and Related Biological Products advisory committee voted that the FDA grant the Pfizer-BioNTech Vaccine an Emergency Use Authorization
With the committee's endorsement, the vaccine is one step closer to receiving the EUA. The final decision from the FDA could come in "the next couple" of days, according to Marion Gruber, the director of the FDA's vaccine research office.
The vaccine has already been approved in Canada, Bahrain, Saudi Arabia and the UK, the last of which began distributing the vaccine on Dec. 8.
"Oil prices broke key chart resistance and climbed to a nine-month high despite a large build in US inventories [reported on Dec. 9]. The rally was propelled by FDA's warm gesture towards a wider distribution of Pfizer's COVID-19 vaccine in a meeting on Thursday (Dec. 10), which raised prospects for a faster economic recovery and removal of lockdown measures," Margaret Yang, strategist at DailyFX told S&P Global Platts Dec. 11.
"Besides, continuous strengthening of iron ore and copper prices reflected strong demand from Asia, which also brightened the energy demand outlook," she added.
To this, Stephen Innes, chief global strategist at Axi in a Dec. 11 note said: "Asia continues to provide much of the backstop for physical with unquenchable oil purchases by China teapots and multiple Indian producer tenders in the pipeline and the softer US dollar is helping the overall commodity cause."
Meanwhile, uncertainty over the US stimulus package -- seen by many to be key to boosting US economic recovery and oil demand -- continued to persist in the market, as lawmakers failed to reach an agreement on contentious issues including the Senate Republican's demand of a "liability shield" for businesses and entities such as schools and universities.
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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