Crude oil settles at 9-month high on vaccine, stimulus hopes

MOSCOW (MRC) -- Crude futures settled at fresh nine-month highs Dec. 18 as the US moved closer to greenlighting a second COVID-19 vaccine, reported S&P Global.

NYMEX January WTI settled 70 cents higher at USD49.24/b, and ICE February Brent was up 76 cents at USD52.26/b.

Front-month settled at the highest since Feb. 25, while front-month Brent was last stronger on Feb. 26.

NYMEX January RBOB settled 75 points higher at USD1.3956/gal, and January ULSD was up 1.78 cents at USD1.5130/b.

A US Food and Drug Administration advisory panel on Dec. 17 voted to approve Moderna's COVID-19 vaccine, paving the way for the agency to issue emergency authorization.

"Crude prices are rising again as Moderna's COVID vaccine is poised to get vaccine authorization from the FDA," OANDA senior market analyst Ed Moya said in a note. However, prices are likely to run into resistance at higher levels until the vaccine rollout becomes widespread, he added.

"Successful vaccine execution is what is needed to send WTI crude well above the USD50 level and that is unlikely to happen for months," Moya said. "The virus spread across the US is going to test hospital capacity over a few states, and that should see lockdowns extended throughout the next couple of months."

Progress on the vaccine approval comes as Congress appears closer on passage of a USD900 billion stimulus package that includes direct payments and expanded unemployment benefits. Lawmakers had said they intended to attach the relief bill to broader government funding bill due by midnight Dec. 18.

A total 885,000 people filed for unemployment benefits for the first time for the week ended Dec. 11, according to US Department of Labor data released Dec. 17, up 23,000 from the prior week and above market expectations of around 800,000.

The weaker-than-expected labor market data highlights the vulnerabilities in the US economic recovery but may in fact be somewhat supportive of oil prices, as it is likely to add pressure to congressional efforts to pass a stimulus package.

Still, gasoline cracks were trending lower amid near-term demand concerns. The front-month ICE New York Harbor RBOB crack against Brent fell to USD6.11/b in afternoon trading Dec. 18, down from a close of USD6.53/b the day prior.

Oil prices have also gleaned support from a weaker US Dollar. The ICE US Dollar Futures Index was trading at below 90 late Dec. 18, up slightly its Dec. 17 close but still at levels last seen in April 2018.

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 polyethylene (PE) and polypropylene (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.
MRC

Iran uses disguised tanker to export Venezuelan oil

MOSCOW (MRC) -- A tanker chartered by the National Iranian Oil Company (NIOC) is loading Venezuelan crude for export, documents from state-run PDVSA show, providing evidence of the two countries' latest tactics to expand their trade in defiance of US sanctions, reported Reuters.

Venezuela and Iran have deepened their cooperation this year as Venezuela has exchanged gold and other commodities for Iranian food, condensate and fuel.

Names of scrapped vessels are being used by several PDVSA (Petroleos de Venezuela, S.A.) customers, including NIOC, to disguise the routes and identities of the tankers they use.

A very large crude carrier (VLCC), identified in PDVSA's loading documents as the Ndros, arrived at Venezuela's main oil port of Jose last week to load 1.9 million barrels of heavy Merey 16 crude bound for Asia, the documents showed.

Vessel-monitoring service TankerTrackers.com used satellite photos to show the Ndros was scrapped in 2018, confirming reports on international shipping databases.

Also using satellite imagery and comparing it with photographs, it said the VLCC's real identity is the Liberia-flagged Calliop. Reuters could not independently verify that as the tanker's name at the hull had been painted black before its arrival at Jose.

PDVSA, Venezuela's oil ministry and NIOC did not respond to requests for comment. The US Treasury Department declined to comment.

Hong Kong-based Ship Management Services Ltd, which bought the Calliop in October, the shipping databases showed, could not be reached for comment.

A spokesperson for the US State Department said that "reports of any impending deliveries would again illustrate the illegitimate regime in Venezuela has turned to international pariahs like Iran to enable their exploitation of Venezuela's natural resources".

Iran sent a VLCC named the Horse to Venezuela in September. It delivered condensate, a very light form of oil, for PDVSA to blend with its very heavy oil to formulate exportable crude.

The tanker returned to Iran in October carrying Venezuelan heavy oil for NIOC, PDVSA's schedules showed. The tanker was misidentified at PDVSA's databases as the Master Honey.

In the run-up to leaving office in January, US President Donald Trump's administration has tightened sanctions on Iran and Venezuela.

A handful of PDVSA's customers that had been allowed to swap Venezuelan oil for fuel under US sanctions had their authorisations suspended in October. But Washington has not intercepted vessels that contribute to the Iran-Venezuela trade.

Smaller Iranian tankers have also delivered gasoline to Venezuela, making several voyages between the two countries since May.

The US Department of Justice in August seized 1.1 million barrels of Iranian gasoline bound for Venezuela on four privately-owned tankers.

The cargoes were transferred to two separate tankers that delivered the gasoline to US ports for auction, in what the department said led to the largest seizure of Iranian fuel.

As MRC wrote before, in late October 2020, Venezuelan state oil company Petroleos de Venezuela restarted gasoline production at the FCC unit of its 310,000 bpd Cardon refinery. The unit was producing between 15,000 and 20,000 bpd of gasoline, according to union leader Ivan Freites. PDVSA earlier last week of October began producing at least 25,000 bpd of gasoline at Cardon’s reformer unit.

MRC also reported that Russian state oil company Rosneft's decision to cease operations in Venezuela and sell its assets there to a Russian government-owned company was a "maneuver" made in reaction to collapsing oil prices, a US State Department official said earlier this year.

We remind that Angarsk Polymers Plant, part of Russian oil giant Rosneft, has resumed its low density polyethylene (LDPE) production after an unscheduled shutdown because of a technical issues at the ethylene unit. The plant's customers said Angarsk Polymers Plant had brought on-stream its LDPE production by 28 August after the forced shutdown due to technical problems at its ethylene production. And the first shipments of polyethylene (PE) to customers began on 31 August. The outage lasted slightly over two weeks and began on 10 August The plant's annual production capacity is about 75,000 tonnes.

According to MRC's ScanPlast report, October estimated LDPE consumption in Russia grew to 50,030 tonnes from 23,930 tonnes a month earlier. Russian producers increased domestic LDPE shipments after the September shutdowns for maintenance. Russia's estimated LDPE consumption was about 456,490 tonnes in January-October 2020, down by 1% year on year. Lower production was offset by higher imports.
MRC

Shell expects USD3.5–4.5 billion in fourth-quarter charges, improved chemicals margins

MOSCOW (MRC) -- Shell says it expects improved base and intermediate chemicals margins in the fourth quarter compared with the third quarter of 2020, reported Chemweek.

The company did not give specific estimates for the forecast margins in a trading update for the fourth quarter issued today.

Group post-tax charges of USD3.5-4.5 billion are also expected in the fourth quarter related to “impairments, asset restructuring, and onerous contracts,” Shell says. These include charges related to the previously announced restructuring of its refinery and chemicals portfolio, impairments for some of its upstream assets, and contracts within its integrated gas business, it says.

The utilization rate for its chemicals manufacturing plants in the fourth quarter is now expected to be 77-81%, narrowing slightly from a range of 77-85% given when Shell released its third-quarter results on 29 October. The company has also narrowed slightly its forecast for chemicals sales volumes in the fourth quarter, estimating them at 3.6–3.9 million metric tons.

Shell also expects to report a loss in adjusted earnings in its upstream business for the fourth quarter due to the current price environment, it says. Gross refining margins in its downstream business are expected to improve slightly quarter on quarter, with the forecast utilization rate put at 72–76%, it says.

The company is scheduled to release its financial results for the fourth quarter on 4 February.

As MRC informed previously, Royal Dutch Shell plc. said in November that its petrochemical complex of several billion dollars in Western Pennsylvania is about 70% complete and in the process to enter service in the early 2020s. The plant's costs are estimated to be USD6-USD10 billion, where ethane will be transformed into plastic feedstock. The facility is equipped to produce 1.5 million metric tons per year (mmty) of ethylene and 1.6 mmty of polyethylene (PE), two important constituents of plastics.

Ethylene and propylene are feedstocks for producing PE and polypropylene (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.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

Ineos Styrolution breaks ground on new ABS plant in Ningbo

MOSCOW (MRC) -- Ineos Styrolution, the global leader in styrenics, has broken ground for its new 600,000-tonnes/year acrylonitrile-butadiene-styrene (ABS) plant located in Ningbo, China, according to Plastics Today.

The development of the new site is part of Ineos Styrolution’s larger expansion plans into China, following an earlier acquisition of two polystyrene (PS) production sites in Ningbo and Foshan.

The location of the new site was selected because of its extensive access to feedstock supply options and excellent supply chain connection to customers. The new site is expected to be operational by 2023.

The ground-breaking ceremony was hosted by Meizhu Fang, Ineos Styrolution APAC Project Director. Attendees included local government and business leaders, engineering and construction representatives, and several project service providers/partners.

“First, we want to thank the Ningbo Municipal Government, Zhenhai District Government, Sinopec Zhenhai Refining & Chemical Co., Ltd., Ningbo Zhoushan Port Group, State Grid Ningbo Power Supply Company and Ningbo Petrochemical Economic and Technological Development Zone administrative committee for providing their very strong support as we embark on this exciting project for our company,” said Steve Harrington, CEO Ineos Styrolution. “The successful completion of this project will be a significant step forward for our ambitious growth plans in China and will allow us to further serve our customers in their domestic market.”

Rob Buntinx, President Asia Pacific at Ineos Styrolution, added: “I am excited to see us building a world-class ABS manufacturing plant here in Ningbo. ABS is a versatile high performance styrenic resin. Its properties make it the material of choice for many everyday products across industries, including automotive, electronics, household, healthcare and toys/sports/leisure. This investment affirms our commitment to support the growth of our customers in Asia.”

According to MRC's ScanPlast report, Russia's estimated consumption of PS and styrene plastics totalled 410,780 tonnes in the first ten months of 2020, which corresponded to the same figure a year earlier. High impact polystyrene (HIPS) and general purpose polystyrene (GPPS) shipments increased, whereas demand for other PS grades subsided.

Ineos Styrolution is the leading global styrenics supplier, with a focus on styrene monomer, polystyrene, ABS Standard and styrenic specialties. With world-class production facilities and more than 90 years of experience, INEOS Styrolution helps its customers succeed by offering innovative and sustainable best-in-class solutions, designed to give them a competitive edge in their markets, and at the same time, help make the circular economy for styrenics a reality. The company provides styrenic applications for many everyday products across a broad range of industries, including automotive, electronics, household, construction, healthcare, packaging and toys/sports/leisure.
MRC

US energy-related carbon dioxide emissions forecast to fall 11% in 2020

MOSCOW (MRC) -- In 2020, carbon dioxide (CO2) emissions from the U. energy sector could be 11% lower than in 2019, according to Hydrocarbonprocessing with reference to US Energy Information Administration (EIA) data through August and EIA estimates for September through December.

According to values published in EIA’s December Short-Term Energy Outlook (STEO), EIA expects CO2 emissions in 2020 to fall by 19% for coal, by 13% for petroleum, and by 2% for natural gas. Many of this year’s changes in energy-related CO2 emissions are attributable to the economic and behavioral effects the COVID-19 pandemic has had on energy consumption.

EIA calculates energy-related CO2 emissions by multiplying energy consumption, measured in British thermal units, by the carbon factor associated with each energy source. For this reason, changes in emissions reflect both changes in the overall amount of energy consumed and the mix of energy sources used.

This year, US energy consumption was heavily affected by responses to COVID-19, including working from home and other stay-at-home measures, closed or limited operating hours for several types of businesses, and travel restrictions. In April, when many parts of the country instituted measures to slow the spread of COVID-19, monthly US energy consumption fell to a 30-year low and emissions fell to a record low.

Petroleum accounted for an estimated 45% of US energy-related CO2 emissions in 2020, and most of those emissions were from the transportation sector. CO2 emissions from petroleum in the transportation sector fell to 102 million metric tons in April 2020, the lowest monthly level since February 1983.

Natural gas, which accounted for an estimated 36% of US energy-related CO2 emissions in 2020, is consumed in several sectors. The electric power sector consumes the most natural gas of any sector, and EIA estimates that in 2020, although electricity consumption declined slightly, the use of natural gas to generate electricity increased.

Coal CO2 emissions this year could reach the lowest annual level (4,597 million metric tons, or 19% of the total) in EIA’s annual emissions series that dates back to 1973. In the electric power sector, where most coal is consumed in the United States, coal has lost market share to natural gas and renewables since peaking in 2007.

As MRC informed before, slumping fuel consumption during the pandemic is accelerating the long-term shift of refining capacity from North America and Europe to Asia, and from older, smaller refineries to modern, higher-capacity mega-refineries. The result is a wave of closures, often centering on refineries that only narrowly survived the previous closure wave in the years after the recession in 2008/09.

We remind that PetroChina has nearly doubled the amount of Russian crude being processed at its refinery in Dalian, the company's biggest, since January 2018, as a new supply agreement had come into effect. The Dalian Petrochemical Corp, located in the northeast port city of Dalian, was expected to process 13 million tonnes, or 260,000 bpd of Russian pipeline crude in 2018, up by about 85 to 90 percent from the previous year's level. Dalian has the capacity to process about 410,000 bpd of crude. The increase follows an agreement worked out between the Russian and Chinese governments under which Russia's top oil producer Rosneft was to supply 30 million tonnes of ESPO Blend crude to PetroChina in 2018, or about 600,000 bpd. That would have represented an increase of 50 percent over 2017 volumes.

Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,760,950 tonnes in th 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.
MRC