MOSCOW (MRC) -- Crude oil futures were rangebound during midmorning Asia trading Dec. 14 as multiple bearish factors, including stymied US stimulus negotiations, the prospect of more Iranian oil, and near-term pandemic considerations, weighed on the market that had received a boost after the US Food and Drug Administration granted the Pfizer-BioNTech COVID-19 vaccine Emergency Use Authorization, reported S&P Global.
At 10:57 am Singapore time (0257 GMT), the ICE February Brent futures contract was up 9 cents/b (0.18%) from the Dec. 11 settle at USD50.06/b while the NYMEX January WTI light sweet crude contract was down 1 cent/b (0.02%) at USD46.56/b. Both markers had risen 1.46% and 0.67% in the week to Dec. 11 to settle at USD49.97/b and USD46.57/b, respectively.
There was optimism earlier on news that the FDA granted an emergency authorization late Dec. 11 to the Pfizer-BioNTech vaccine, which had begun shipping from Pfizer's Kalamazoo facility for distribution.
"The oil markets are trading up this morning as the FDA approves the vaccine's emergency rollout ... a convoy of trucks is already making their way from Pfizer Kalamazoo headquarters to US hospitals and the Airline industry is also kicking in by offering idled planes as vaccine cargo haulers," said Stephen Innes, chief global strategist at Axi, in a Dec. 14 note.
"Indeed, this will help assuage some of the market's growing laundry list of near-term economic worries," he added.
ANZ analysts echoed this sentiment, saying in a Dec. 14 note, "Investors have been buoyed by the rollout of the COVID-19 vaccines, which promise to enable governments to ease restrictions that have hindered crude oil demand."
However, bearish factors continued to remain at play as negotiations over a US stimulus package remained stalled over issues like government aid to states and a COVID-19 "liability shield" for businesses and entities, such as schools and universities.
Elsewhere in Iran, state news agency IRNA reported Dec. 13 that the country is planning to produce 4.5 million b/d of crude oil and condensate in its next year that starts March 21, 2021, and export 2.3 million b/d of it, if current US sanctions are lifted.
All along, the coronavirus pandemic has continued to escalate in the US and Europe, with the former rapidly nearing the grim milestone of 300,000 COVID-19 deaths.
After a light lockdown imposed at the start of November failed to curb the spread of the virus, Germany announced on Dec. 13 a more stringent lockdown, which will start from Dec. 16 and end on Jan. 10, 2021. The lockdown will see most schools and shops closing down, according to media reports.
Chris Midgley, global head at S&P Global Platts Analytics, said Dec. 11 that while Platts Analytics expects global oil demand to rise by more than 6 million b/d in 2021, fundamentals for the oil market are not as rosy in the near-term.
"While in the long-term we are more optimistic about a rebound of oil demand, causing us to upwardly revise our 2021 demand outlook, in the short term, we expect things to worsen, with increased second-wave lockdowns in U.S. and Europe resulting in much weaker gasoline demand across the holiday season," he said.
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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