Oil edges higher on crude stock draw, easing pandemic pain in US

MOSCOW (MRC) -- Crude oil futures edged higher during mid-morning trade in Asia Jan. 27, spurred by bullish data from the American Petroleum Institute and an improved pandemic outlook in the US, even as demand-side uncertainties owing to the progression of coronavirus elsewhere continued to weigh on sentiment, reported S&P Global.

At 10:55 am Singapore time (0255 GMT), the ICE Brent March contract was up 11 cents/b (0.20%) from the Jan. 26 settle to USD56.02/b, while the March NYMEX light sweet crude contract was up 11 cents/b (0.21%) at USD52.72/b.
The uptick comes as data from the American Petroleum Institute released Jan. 26 showed a massive 5.27 million-barrel draw in crude inventories in the week ended Jan. 22. Analysts, in contrast, had told S&P Global Platts that they had expected the draw in the same week to be much smaller at roughly 1.7 million barrels.

"Crude oil prices today are underpinned by a much larger-than-expected weekly draw in inventories, as well as a weakening US Dollar," Margaret Yang, DailyFX strategist, told Platts Jan. 27.

Any increase in crude prices this morning, however, may have been tempered by the bearish elements in the API report, which also indicated that fundamentals in downstream product markets remained weak. US gasoline and distillate inventories jumped by 3.06 million barrels and 1.40 million barrels, respectively, in the week ended Jan. 22.

At 10:55 am, the NYMEX February RBOB contract was trading 0.44 cents/gal (0.28%) lower than the Jan. 26 settle at USD1.5763/gal and NYMEX February ULSD contract was up by 0.04 cents/gal (0.03%) at USD1.5988/gal.

Market participants will now be looking towards more comprehensive inventory data from the US Energy Information Administration to be released later in the day.

Meanwhile, progress towards alleviating the pandemic situation in the US may also have supported oil markets Jan. 27.

"Continuous drop in US daily COVID-19 counts has brightened the energy demand outlook as the likelihood of easing some of the lockdown measures is rising with the rollout of vaccines," Yang told Platts. "US daily COVID-19 new cases have fallen to 133,913 on January 25th, marking the lowest reading since November 15th, according to CDC."

Outside of the US, however, the pandemic situation remained grim. In Europe, countries are considering greater restrictions to curb the spread of the virus, whereas in Asia, demand-side concerns remain heightened following an outbreak in China.

Already, authorities in China have called upon citizens to not travel during the Lunar New Year Holiday, souring sentiment in the oil markets.

"While the general upward direction of travel in the market makes sense, it's difficult for oil traders to make a definitive near-term shift to the next price level higher given the very uncertain near-term demand outlook," surmised Stephen Innes, chief global markets strategist at Axi, in a Jan. 27 note.

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.
MRC

MOSCOW (MRC) -- Venator Materials named three new members to its board of directors, all of whom are affiliated with private equity firm SK Capital Partners (New York, New York). The appointments come after SK Capital acquired a 39.75% stake in Venator for USD100 million, said Chemweek.

The three new board members are Barry Siadat, co-founder of SK Capital; Aaron Davenport, managing director at SK Capital; and Heike van de Kerkhof, CEO of Archroma, a portfolio company of SK Capital. Siadat also serves on Archroma’s board, and is chairman of Ascend Performance Materials’ board.

Daniele Ferrari, Peter Huntsman, Kathy Patrick, and Venator CEO Simon Turner will continue to serve on Venator’s board. Douglas Anderson and Robert Margetts have resigned from the company’s board, effective 1 January.

As per MRC, SK Capital Partners completed the acquisition of a 39.75% stake, roughly 42.4 million shares, in titanium dioxide maker Venator from Huntsman for roughly USD100 million. The deal includes a 30-month option for the purchase of Huntsman’s remaining approximate 9.5 million shares by SK at US2.15/share. Huntsman spun off Venator in a 2017 initial public offering.

As MRC reported earlier, Nanjing Jinling Huntsman, a joint venture between Huntsman and Sinopec Jinling, planned to shut its propylene oxide plant in Nanjing (Nanjing, Jiangsu Province, China) on November 1 for scheduled maintenance. This plant with a capacity of 240,000 tonnes/year of propylene oxide will be closed until approximately 25 November.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's DataScope report, 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.
MRC

MOSCOW (MRC) -- L&T Hydrocarbon Engineering (LTHE), a wholly-owned subsidiary of Larsen and Toubro, announced that it has bagged an over to ?7,000 crore project to set up dual feed cracker unit in Rajasthan., said Chemweek.

In its regularity filing it did not provide the exact value of the contract, but specified that it secured the mega project from HPCL Rajasthan Refinery Ltd (HRRL).

"L&T Hydrocarbon Engineering Limited (LTHE), a wholly-owned subsidiary of Larsen and Toubro, has won an order from HPCL Rajasthan Refinery Limited (HRRL), a joint venture between Hindustan Petroleum Corporation (HPCL) and Government of Rajasthan," L&T said in a regulatory filing.

L&T said the engineering, procurement, construction and commissioning contract is for setting up a dual feed cracker unit (DFCU) for Rajasthan Refinery Project at Barmer, Rajasthan. "The DFCU is the biggest EPCC contract awarded in the country to date in the refinery and petrochemical sector," the company added.

The DFCU is used to convert Refinery Naphtha and Offgases to produce polymer grade Ethylene and Propylene by the process of thermal cracking. Shares of L&T were trading 1.24 per cent higher at ?1,161.95 apiece on BSE.

The recovery in the L&T stock has gathered further steam after the company informed the exchanges that it has won multiple orders for its construction and mining business.

So far in the December quarter, shares of the company have rallied nearly 31%. The stock of the engineering and capital goods major is now only around 7% away from its pre-covid highs.

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.

HRRL is a joint venture between Hindustan Petroleum Corporation (HPCL) and Government of Rajasthan.
MRC

MOSCOW (MRC) -- Shandong Shangneng Group (Shangneng) has chosen Shell Catalysts & Technologies (SC&T) to provide them with their April 2021 hydrocracking catalyst refill for their two-stage DAO hydrocracker located in Dongying, Shandong province, China, according to Hydrocarbonprocessing.

Shangneng will be the first refinery to use a new heavy feed hydrocracking catalyst system (MACH) from SC&T when it starts up in April 2021.

The Shangneng refinery has a crude capacity of 3.5 MTPA, including a two-stage DAO hydrocracking unit for maximum diesel production at >98% conversion.

Based on successful work with several DAO hydrocrackers as well as similar two-stage hydrocracker configurations, SC&T was able to provide Shangneng with a plan to deliver an improved operating strategy and catalyst system. This includes a more robust pretreat catalyst system to accommodate the added DAO component and a new customized cracking catalyst system to deliver superior distillate yields at high conversion while minimizing PCA (poly-cyclic aromatics) accumulation in the recycle loop.

When the project is completed, the Shangneng hydrocracker is expected to have improved performance to support the capacity expansion of the hydrocracker at 98% conversion, generating an estimated margin improvement of USD15 million per year.

As MRC wrote before, Royal Dutch Shell has reported an outage at its olefins plant in Deer Park, Texas, on 5 January, 2021. The plant flared for 16 hours last Tuesday following unspecified process upset. Maximum steam cracker operating rate in Texas falls to 89%.

Ethylene and propylene are feedstocks for producing 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.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

MOSCOW (MRC) -- The project will convert an existing hydrocracker for the production of low-carbon renewable diesel from soybean oil, resulting in a reduction of greenhouse gas emissions compared to hydrocarbon diesel, said Hydrocabonprocessing.

The renewable diesel is expected to meet the ASTM D975 diesel specification and qualify for programs such as the California Low Carbon Fuel Standard.

"By leveraging assets already in place, particularly the existing hydrocracker unit and underutilized hydrogen plant at our Wynnewood refinery, we believe we can deliver one of the lowest-cost renewable diesel projects in the industry,” says Dave Lamp, CEO & President of CVR Energy, Inc.

“We are very proud that CVR Energy, Inc. has chosen HydroFlex™ for this significant revamp project. This proven technology is the preferred choice for refiners leading the industry adaptation of renewable fuels, and it is a privilege to add yet another US project to our portfolio in line with Topsoe’s vision to be recognized as the world leader in carbon emission reduction technologies by 2024,” says Henrik Rasmussen, Managing Director of Haldor Topsoe, The Americas.

Topsoe’s HydroFlex™ is the industry-leading technology for production of renewable jet and diesel. This commercially proven technology provides refiners with lower CAPEX, lower OPEX, and better carbon intensity (CI) score. HydroFlex™ can be deployed in both grassroots units and revamps for co-processing or stand-alone applications.

As MRC reported earlier, Braskem, the largest petrochemical company in the Americas and a world leader in the production of biopolymers, and Denmark-based Haldor Topsoe, a global leader in supply of catalysts, technology, and services for the chemical and refining industries, announced in November 2020 that they had achieved their first-ever demo-scale production of bio-based monoethylene glycol (MEG).

MEG is used to produce polyethylene terephthalate (PET), which is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

As per MRC's ScanPlast, Russia's estimated PET consumption reached 61,110 tonnes in November 2020, up by 1% year on year. Overall PET consumption in Russia reached 648,110 tonnes in the first eleven months of 2020, down by 18% year of year.

Haldor Topsoe is a global leader in supply of catalysts, technology, and services to the chemical and refining industries. Topsoe aims to be the global leader within carbon emission reduction technologies by 2024. By perfecting chemistry for a better world, we enable our customers to succeed in the transition towards renewable energy. Topsoe is headquartered in Denmark and serves customers around the globe.

MRC