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Crude price rally extends amid dollar retreat, stimulus hopes

January 15/2021

MOSCOW (MRC) -- Crude prices settled higher Jan. 14 as a weaker US dollar offset reports of weakened Chinese crude demand, reported S&P Global.

NYMEX February WTI settled 66 cents higher at USD53.57/b, and ICE March Brent was up 36 cents at USD56.42/b.

The US dollar turned lower in US trading after Federal Reserve Chairman Jerome Powell reaffirmed the Fed's commitment to lower interest rates. Powell also said any tapering of asset purchases would be telegraphed in advance.

"Fed Chair Powell affirmed the Fed's playbook and has tentatively put an end to any taper talk," OANDA senior market analyst Edward Moya said in a note. "Dollar weakness resumed following Fed Chair Powell's dovish commitment and on nervous anticipation over Biden's stimulus package announcement later today."

President-elect Biden is expected to present a sweeping pandemic relief and stimulus plan later Jan. 14 he has said previously would be worth "trillions."

NYMEX February RBOB settled 51 points higher at USD1.5539/gal, and February ULSD finished up 2.05 cents at USD1.6194/gal.

In its closely watched oil market report released Jan. 14, OPEC kept its 2021 global demand forecast little changed at 95.91 million b/d, compared with 95.89 million b/d last month. The forecast is still 5.9 million b/d higher than 2020.

While rising COVID-19 infections and additional lockdown measures are affecting most major OECD countries, "the situation in emerging economies seems to have improved lately," OPEC said.

But pandemic risks continue to stalk the market. Initial US unemployment claims jumped to a five-month-high 945,000 in during the week-ended Jan. 9, Labor Department data showed Jan. 14, exceeding market expectations of around 800,000 claims.

A weak labor market is likely to create headwinds for refined product demand recovery, especially gasoline. US driving activity edged 0.2% higher in the week ended Jan. 8, according to Apple mobility data, but was still near levels last seen in late May.

The ICE New York Harbor RBOB crack against Brent narrowed to USD8.81/b in afternoon trading, in from USD8.90/b the session prior.

China's crude imports fell to a 27-month low of 9.096 million b/d, or 38.47 million mt, in December, according to General Administration of Customs data released Jan. 14.

The more than 15% year-on-year and month-on-month fall was sharper than had been expected, with analysts pointing to a shortage of crude import quotas and destocking activity as the key reasons for the decline, even as they forecast a strong rebound for January imports.

Having imported record volumes earlier in the year when crude prices were lower, the drop in December indicated that the country was well stocked and imports could fall back this year, some analysts said.

Total imports over 2020 were up 7% year on year to 10.86 million b/d, data showed.

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.
Author:Margaret Volkova
Tags:Asia, Europe, PP, PE, crude and gaz condensate, homopolymer PP, propylene, HDPE, ethylene, petrochemistry, BASF, Borealis, BP Plc, LyondellBasell, Sabic, Total Petrochemicals, China, Russia, USA.
Category:General News
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