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U.S. crude output drops in October as demand falls further

January 18/2021

MOSCOW (MRC) -- U.S. crude oil production was down more than 2 million barrels per day (bpd) in October from earlier this year, as weak prices and tepid demand due to the coronavirus pandemic weighed on output, a government report showed, said Hydrocarbonprocessing.

The report suggested that crude demand in the worlds largest economy remained below the highs of earlier this year, and production was largely flat since cuts began in the spring. Total U.S. oil demand in October was down by 2.15 million bpd, or more than 10% below the same month a year earlier. The decline was sharper than the 9.5% seen in September.

Output has fallen from a record-high monthly average of 12.86 million bpd in November, 2019. Production dropped sharply in May as low demand and prices forced widespread drilling cuts. Oil output dropped by 442,000 barrels per day to 10.42 million bpd in October, the latest month for which data was available. The losses were led by declines in the offshore U.S. Gulf of Mexico, according to the Energy Information Administration report.

Storms that month caused offshore production shut-ins, contributing to the losses. Still, even without the Gulf declines, production remained below pre-pandemic levels. Top onshore producers Texas and North Dakota reported modest gains in the month as some producers brought into production wells that had been shut, as prices improved.

Meanwhile, U.S. natural gas production for October was 99,568 million cubic feet a day, down from 100,221 in September.

As MRC reported earlier, oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook, according to an official with International Energy Agency's (IEA) statement.

We remind that the COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.

We also remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegazs existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes the creation of a gas chemical complex using methanol-to-olefins (MTO) technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex.

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.
Author:Anna Larionova
Tags:petroleum products, crude oil, PP, PE, neftegaz, petrochemistry.
Category:General News
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