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MOSCOW (MRC) -- The crude price rally
stumbled Jan. 11, with futures settling mostly lower amid fresh pandemic demand
growth concerns following the imposition of new lockdowns in Asia, reported S&P Global.
NYMEX February WTI
settled up 1 cent at USD52.25/b, while ICE March Brent finished down 33 cents at
USD55.66/b.
A fresh outbreak of coronavirus infections in Hebei province,
near Beijing, has led to lockdowns in provincial capital Shijiazhuang and
Xingtai, China"s National Health Commission said Jan. 8, adding the
epidemiological origin of the outbreak has not been identified. Residents have
been barred from leaving, and public transport has been halted.
On Jan.
11, the NHC reported 103 new cases of infections in China, the highest daily
rise since late July, with 82 out of the 85 local cases from Hebei.
"The
rally with oil was getting out of hand and prices needed to pullback as the
uncertainty over short-term crude demand remains elevated," OANDA senior market
analyst Edward Moya said in a note. "Chinese crude demand has been a bright spot
for the oil market, but that could quickly end if China steadily sees new
clusters."
NYMEX February ULSD settled down 60 points at USD1.5735/gal,
and February RBBO was down 2.15 cents at USD1.5208/gal.
Pandemic-related
demand concerns weighed on gasoline cracks. The ICE New York Harbor RBOB crack
against Brent edged down to USD8.28/b in afternoon trading, retreating from more
than five-month highs reach Jan. 8.
The Platts northwest Europe gasoline
Eurobob crack against Brent fell back to USD3.15/b, down from a 10-week high
Jan. 8.
Total US gasoline inventories are expected to have climbed 3.2
million barrels higher in the week ended Jan. 8, analysts surveyed by S&P
Global Platts said Jan. 11, putting stocks at around 244.3 million
barrels.
US driving activity edged 0.2% higher in the week ended Jan. 8,
according to Apple mobility data, remaining near levels last seen in late May
and likely portending a weaker-than-normal post-holiday demand rebound. The
five-year average of US Energy Information Administration data shows implied
demand for gasoline is up around 2% in early January, as workers return from the
end-of-year holiday.
Recent economic data also suggests that a second
wave of pandemic lockdowns in the US is impacting labor markets fast than
anticipated, likely weighing further on gasoline demand. December non-farm
payrolls contracted by 140,000 jobs, US Bureau of Labor Statistics data showed
Jan. 8, below market expectations of a slight increase in jobs.
A rising
US dollar added to oil price headwinds. The ICE US Dollar Index rallied up to
90.48 in afternoon trading, on pace for the strongest close since Dec.
22.
As MRC informed
previously, global oil demand may have already peaked, according to BP"s latest
long-term energy outlook issued in September 2020, as the COVID-19 pandemic
kicks the world economy onto a weaker growth trajectory and accelerates the
shift to cleaner fuels.
Earlier last 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. |
