MOSCOW (MRC) -- Crude oil futures were lower during mid-morning trade in Asia Feb. 11 on the back of a build in US gasoline inventories and despite the sharp drop in crude oil stocks, reported S&P Global.
At 10:55 am Singapore time (0255 GMT), ICE April Brent crude futures fell 37 cents/b (0.6%) from the Feb. 10 close at USD61.10/b while the NYMEX March light sweet crude contract was 34 cents/b (0.58%) lower at USD58.34/b.
US commercial crude oil inventories fell 6.6 million barrels to 469 million barrels in the week ended Feb. 5, according to the latest weekly report by the US Energy Information Administration released late Feb. 10. However, total motor gasoline inventories, said to be one of the key determinants in gauging demand sentiment for the overall fuel complex, rose by 4.3 million barrels.
"Crude oil stockpiles fell to their lowest level since March 2020. However, sentiment was curtailed by a rise in gasoline inventories," ANZ analysts said in a note Feb. 11.
Oil prices have hit highs in recent trading sessions, due to an amelioration of bullish factors such as vaccine rollouts, expectations of demand recovery, and OPEC+ production cuts. This has led some analysts to warn that the market may be in danger of overheating.
Some noted that the higher prices may induce producers to supply more, thereby sending prices south instead.
"Oil prices couldn't hold onto its gains possibly on the expectation that Saudi Arabia could roll back their unilateral February/March production cuts and that OPEC could signal more production coming back online at the March meeting given the sizzling recovery in oil prices," Stephen Innes, chief global markets strategist at Axi, said in a note Feb. 11.
Beyond the short term, market participants still hold much optimism and believe that the pace of demand recovery will be such that supply will not be able to keep up.
French oil major Total said in its Q4 earnings call on Feb. 9 that global shortfall in supply could be 10 million b/d from now till 2025.
"There is a risk of supply crunch in the mid-term," Helle Kristoffersen, Total's president for strategy and innovation said on the call.
"We have seen in 2020 how OPEC managed to bring back market discipline. We've seen the cracks in the US shale model, and we've seen a continued underinvestments in the oil industry as a whole," he added.
As MRC informed before, Total posted better than expected earnings in the fourth quarter as oil prices stabilized, and said it would change its name as part of a push to diversify and grow renewable power and electricity production. The French oil and gas major, which like rivals suffered in 2020 as fuel consumption tumbled during the pandemic, said it would rebrand as TotalEnergies as it tries over the next decade to reduce oil products to a third of its sales from over half now.
We remind that in November 2019, Total disclosed that itis evaluating construction of a new gas cracker at its Deasan, South Korea, joint venture (JV) with Hanwha Chemical.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).
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