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MOSCOW (MRC) -- Crude prices rose Jan.
19 after data released by the International Energy Agency expected a 300,000 b/d
drop for OPEC oil production in 2021 at 27.7 million b/d, and on favorable
economic signals in the US and China, reported S&P Global.
At 12:29 pm London
time (1229 GMT), the ICE March Brent contract was up 62 cents/b from the Jan. 18
settle at USD55.38/b while the NYMEX February light sweet crude contract was up
50 cents/b at US52.55/b.
IEA data released Jan. 19 also showed a 240,000
b/d reduction in its outlook for oil demand across 2021 at 5.5 million b/d,
emphasizing the mixed fundamentals in the crude oil market.
"Despite
rising COVID-19 cases, crude oil prices are well supported by financial,
economic and market fundamentals," the IEA said.
The recovery picture in
the crude oil market would likely continue to stay mixed, with bullish data
pointing to both rising domestic demand for refined products as well as the
potential for more supply to be offered to the wider global oil market. Data
from China's National Bureau of Statistics showed that 7.3% more crude oil was
imported in 2020 than in 2019, signaling a robust demand recovery in the
country.
"There are bearish and bullish arguments. Almost every news can
be interpreted in several different ways," said Eugen Weinberg, analyst at
Commerzbank.
Crude oil prices also found some support from favorable US
news, as Janet Yellen, US President-elect Joe Biden's nominee to run the
Treasury Department, will tell the Senate Finance Committee later Jan. 19 that
the US government must "act big" with its next coronavirus relief package. Biden
had outlined a USD1.9 trillion stimulus package proposal in the week ended Jan.
16, stressing that a bold investment was needed to jump-start the economy and
accelerate the distribution of vaccines.
Stephen Innes, chief global
markets strategist at Axi, said oil remains resilient despite the mixed picture.
"There are many Covid jitters out here, still Oil continues to hold and looks to
nudge higher eying support from the weaker US dollar as oil sensitive currencies
are showing the way."
As MRC informed
previously, 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
Uzbekneftegaz’s 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. |
