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Crude rises as IEA expects lower OPEC+ production in 2021

January 19/2021

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 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:Margaret Volkova
Tags:Asia, PP, PE, crude and gaz condensate, homopolymer PP, propylene, HDPE, ethylene, gas processing, medicine, petrochemistry, Gazprom neft, Sibur Holding, Shurtans Gas-Chemical Plant, China, Russia, USA, Uzbekistan.
Category:General News
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