Crude oil futures edge higher on bullish US stocks data, shrug off stimulus wrangling

MOSCOW (MRC) -- Crude oil futures edged higher during mid-morning trade in Asia Dec. 24 on positive crude stocks data from the US Energy Information Administration, and shrugging off uncertainty over the passing of a US stimulus package, reported S&P Global.

At 10:42 am Singapore time (0242 GMT), the ICE Brent February contract was up 14 cents/b (0.27%) from the Dec. 23 settle at USD50.34/b, while the February NYMEX light sweet crude contract was up 11 cents/b (0.23%) at USD48.23/b. The markers had risen 2.24% and 2.34% respectively on Dec. 23.

The uptrend continued into early trade in Asia Dec. 24, fueled by the release of EIA data showing that US crude inventories fell 570,000 barrels in the week ended Dec. 18 to 499.53 million barrels. Although this was short of analyst expectations of around a 4.7 million-barrel draw, it was more bullish than the American Petroleum Institute's Dec. 22 estimate of a 2.7 million-barrel build in the week.

The EIA report also suggested fundamentals in downstream markets had improved, with US gasoline stocks falling 1.13 million barrels to 237.75 million barrels and distillate stocks falling 2.33 million barrels to 148.93 million barrels in the week. Analysts in contrast had expected a 1.4 million-barrel rise in gasoline stocks and a 1.1 million-barrel fall in distillate stocks.

According to the EIA data, implied demand for gasoline rose 422,000 b/d in the week ended Dec. 18 to 7.9 million b/d, in line with seasonal norms and as Apple Mobility data showed that US driving activity was at a four-week high. Implied distillate demand rose 172,000 b/d to 4.17 million b/d.

"The EIA data is definitely providing some icing to the cake, and there are some other factors at play here as well, including some weakness in the dollar and a slight improvement in US jobless claims numbers " Jeffrey Halley, senior market analyst at OANDA, told S&P Global Platts on Dec. 24.

The political flip-flop over US fiscal relief measures was continuing after US President Donald Trump demanded changes to the Congress-approved stimulus package, including increasing the package's "ridiculously low USD600 direct payments.

However, analysts said oil market participants still expect a stimulus deal to eventually be squeezed out, and were largely ignoring the political wrangling.

"The market seems to have largely overlooked President Donald Trump's rejection of the stimulus package as, despite all the to and fro, the expectation is that a stimulus deal will still emerge and there is a possibility that this deal could be even bigger," Halley 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 polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) - Petrol stations across Sudan will rely exclusively on imported fuel while the country's main oil refinery begins routine maintenance, said Reuters.

Sudan has operated a two-tier price system since October, in an attempt to decrease reliance on subsidies, whereby imported gasoline and diesel is sold at more than double the price of locally-produced fuel.

However, with the 70-day maintenance of the Khartoum refinery, only imported gasoline and diesel will be available to consumers. Any fuel produced locally during this period will be directed towards the agriculture, electricity, public transportation, and security sectors, the statement said.

Fuel shortages and long queues at stations are common in Sudan as the government struggles to come up with foreign currency for imports, which were opened up to the private sector in April.

A ministry spokesman said a policy for prices after the maintenance is completed has not yet been determined.

As mRC informed earlier, Sudan and South Sudan have begun negotiating with a Russian company to build a refinery on the Red Sea for both countries’ benefit.

We remind that in July 2020, Eni and NextChem, the Maire Tecnimont Group’s subsidiary for green chemistry, strengthened their partnership one year after their first agreement. This partnership will conduct research for a new project to be developed in Taranto, in addition to ongoing engineering studies for a waste-to-hydrogen production plant at the Eni bio refinery in Venice, Porto Marghera, and for a waste-to-methanol production plant at the Eni refinery in Livorno.

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

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- US governors from Massachusetts and Connecticut announced their commitment to a low-carbon transportation program on Monday, but gasoline-related trade groups say it has flaws that will harm, rather than promote, use of fuels that produce fewer pollutants, according to Hydrocarbonprocessing.

Some oil refiners and energy trade groups have been more supportive this year of low-carbon fuel programs nationwide because the incentives can prove profitable for their industries.

The Transportation and Climate Initiative Program, or TCI-P, favored by the states would require large gasoline and diesel suppliers to purchase auctionable "allowances" for the pollution caused by combustion of fuels they sell in participating areas.

Trade groups, including the National Association of Truckstop Operators (NATSO) and the National Association of Convenience Stores (NACS), argue that TCI-P fails to effectively encourage investment in alternative fuels, and instead only penalizes fuel retailers that sell traditional fuel, according to a letter seen by Reuters addressed to a Massachusetts state official.

Another incentive program, California's Low Carbon Fuel Standard, allows refiners to generate tradable credits with production of lower carbon-intensive fuels.

"Market-oriented incentive policies have proven to drive private sector investment in clean fuels, but TCI's centralized, punitive structure will make businesses reluctant to embrace alternative fuels," said David Fialkov, counsel to NATSO.

Kathleen Theoharides, secretary for the executive office of energy and environmental affairs in Massachusetts, said that through the program, the market would encourage investment.

"This is certainly going to send a market signal that if they make investments in renewable blends, they can pass on a cheaper cost to consumers and outcompete their competitors," Theoharides said.

As MRC reported previously, earlier this month, NextChem, Maire Tecnimont Group’s subsidiary for the development of projects and technologies for energy transition, and JFE Engineering Corporation, engineering and operative company of Japan Group JFE, have signed a commercial agreement which strengthens the cooperation between the companies. The agreement aims at developing in cooperation the model which considers waste as a resource to produce advanced fuels, hydrogen, fertilizers and low carbon chemical products.

We remind that in July 2020, Eni and NextChem, the Maire Tecnimont Group’s subsidiary for green chemistry, strengthened their partnership one year after their first agreement. This partnership will conduct research for a new project to be developed in Taranto, in addition to ongoing engineering studies for a waste-to-hydrogen production plant at the Eni bio refinery in Venice, Porto Marghera, and for a waste-to-methanol production plant at the Eni refinery in Livorno.

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

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- PQ Group Holdings Inc., a leading, global provider of specialty catalysts, materials, chemicals and services, says it has closed on the sale of its performance materials division, a maker of glass microspheres for transportation safety and electronics applications, to private equity firm The Jordan Company (New York, New York) for USD650 million, reported Chemweek.

The deal was announced in October, 2020.

PQ will use proceeds from the deal to pay down about USD465 million in debt and pay a USD250 million, or USD1.80/share, special dividend to shareholders. The dividend will be paid on 29 December to shareholders of record as of 21 December.

“With the sale of Performance Materials at an attractive valuation, we take a significant step in reshaping the PQ portfolio toward a higher-margin, higher-growth-potential business,” says Belgacem Chariag, PQ chairman and CEO.

The company did not provide an update on the sale of its performance chemicals segment, a manufacturer of sodium silicate and silicate derivatives. The two divestitures, which combined represent over 60% of PQ’s annual revenues, are part of a strategy to focus the company on its catalysts and refining services businesses.

As MRC informed earlier, in late 2019, PQ Group Holdings announced an agreement with INEOS Polyolefin Catalysts to commercialize certain polyethylene (PE) catalysts to customers of selected processes.

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports.
MRC

MOSCOW (MRC) -- Daelim Corporation has completed the expansion work at its existing linear low density polyethylene (LLDPE) line in Yosu, South Korea at the beginning of December, according to CommoPlast with reference to market sources.

The unit is now capable of producing 200,000 tons/year of LLDPE, up from the previous output of 150,000 tons/year.

In the meantime, Daelim is constructing a new polyethylene (PE) line with an annual production output of 210,000 tons/year at the same site. The company said that it has completed major processes and the line would be able to come online by mid of January 2021.

The expansion project would boost the overall LLDPE production at Daelim to 410,000 tons/year. However, the company plans to focus primarily on making metallocene grade (mPE).

As MRC reported earlier, in October 2018, Daelim Industrial shut its high density polyethylene (HDPE) plant for a 30-day maintenance turnaround. The exact date of the shutdown could not be confirmed. Located in Yeosu, South Korea, the plant has a production capacity of 270,000 mt/year.

According to MRC's ScanPlast report, October LLDPE shipments to Russia increased to 58,910 tonnes from 19,110 tonnes a month earlier. A producer cut its exports. Russia's overall LLDPE shipments totalled 335,220 tonnes in the first ten months of 2020, up by 2% year on year.

Daelim Industrial was established in 1939, and its E&C (Engineering & Construction) and Petrochemical Groups are the main lead of the Daelim Business Conglomerate (Chaebol). The fields covered by Daelim Industrial as one of the top EPC Company in Asia to the Middle East include gas, petroleum refining, chemical and petrochemical, power and energy plants, building and housing, civil works, and industrial facilities. Daelim Group has 17 subsidiary companies under its umbrella which includes Daelim Industrial (Construction Division), Daelim Industrial (Petrochemical Division), etc.
MRC