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Oil above USD56 on US stimulus hopes ahead of Biden inauguration

January 21/2021

MOSCOW (MRC) -- Oil rose above USD56 a barrel on Wednesday, supported by expectations that the new US administration will deliver massive stimulus spending that would lift demand, as well as by OPEC curbs and forecasts for a drop in US crude inventories, reported Reuters.

US Treasury Secretary nominee Janet Yellen on Tuesday urged lawmakers to "act big" on pandemic relief spending. A fall in the dollar after the comments helped oil to rally, analysts said.

"This provided a good backdrop for oil and other risk assets," said Stephen Brennock of broker PVM. "While the near-term demand environment continues to be gripped by weakness and uncertainty, the future is brightening."

Brent crude was up 61 cents, or 1.1%, at USD56.51 a barrel at 1435 GMT, having gained 2.1% on Tuesday. U.S. West Texas Intermediate (WTI) crude climbed 66 cents, or 1.3%, to USD53.64.

President-elect Joe Biden's inauguration is on Wednesday.

"Increased fiscal support means more growth and higher U.S. oil demand," said Eugen Weinberg of Commerzbank. "What is more, the oil market is likely to remain in supply deficit both in the first quarter and in the year as a whole."

A record output cut by OPEC and its allies, a group known as OPEC+, last year helped to lift prices from historic lows.

This month Brent hit an 11-month high of USD57.42, helped by Saudi Arabia pledging to make additional, voluntarily cuts and most OPEC+ members agreeing to keep output steady in February.

Oil drew more support from expectations of lower US crude inventories. Analysts estimate crude stocks fell by 300,000 barrels in the week to Jan. 15. The first of the week's two supply reports is due on Wednesday from the American Petroleum Institute.

Gains were limited by concern about near-term demand as COVID-19 infections rise.

China's capital, Beijing, on Wednesday announced stricter COVID-19 control measures. Germany on Tuesday extended a lockdown for most shops and schools.

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.

 


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