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Record U.S. crude stockbuild as refining plummets

March 04/2021

MOSCOW (MRC) -- U.S. crude oil stockpiles surged by a record of more than 21 million barrels last week as refining plunged to an all-time low as plants remained shut due to the Texas freeze that knocked out power for millions, the Energy Information Administration said, said Hydrocarbonprocessing.

With refiners unable to process crude, gasoline and distillate inventories also dropped dramatically, especially in the Gulf Coast region where their declines set records. Oil prices jumped after the data, with U.S. crude futures climbing to USD61.41 a barrel, a 2.7% increase as of 10:49 a.m. ET (1549 GMT). Brent rose 2.3% to USD64.14 a barrel.

"The market is realizing this is probably a one-off. I think they're shaking it off already," said Phil Flynn, senior analyst at Price Futures Group. "I think everyone is looking at this as a snapshot in time. They expect these inventories to fall dramatically when the exports start moving again and the refiners start running."

Crude inventories rose by 21.6 million barrels, the largest one-week increase ever, in the week to Feb. 26 to 484.6 million barrels. Analysts had anticipated a 932,000-barrel drop. Refinery crude runs fell by 2.3 million barrels per day in the last week, and the overall refinery utilization rate plunged 12.6 percentage points to an all-time low at 56%, EIA said.

That was largely driven by the slump in U.S. Gulf Coast refining, which dropped to just over 40% of its overall capacity. The increase in stocks was also driven by a big jump in U.S. crude imports, which rose by a net 1.66 million barrels per day, EIA said.

U.S. gasoline stocks fell by 13.6 million barrels in the week, the most ever, to 243.5 million barrels, the EIA said, compared with analysts' expectations in a Reuters poll for a 2.3 million-barrel drop. Distillate stockpiles, which include diesel and heating oil, fell by 9.7 million barrels in the week to 143 million barrels, versus expectations for a 3 million-barrel drop, the EIA data showed. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 485,000 barrels in the last week, EIA said.

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.

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 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). Supply of exclusively PP random copolymer increased.


mrcplast.com
Author:Anna Larionova
Tags:petroleum products, PP, PE, neftegaz, petrochemistry.
Category:General News
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