Crude oil futures rise on bullish EIA products data; supportive macroeconomic developments

MOSCOW (MRC) -- Crude oil futures rose during mid-morning trade in Asia March 11 as bullish US products data from the Energy Information Administration negated a large build in US crude inventories, with the market also gaining support from the US Congress' approval for fiscal relief and the depreciation of the dollar, reported S&P Global.

At 11:08 am Singapore time (0308 GMT), the ICE Brent May contract was up by 53 cents/b (0.78%) from the March 10 settle to USD68.43/b, while the April NYMEX light sweet crude contract was up by 54 cents/b (0.84%) to USD64.98/b.

Data released by the EIA late March 10 showed a massive 13.8 million-barrel build in US crude inventories in the week ended March 5. The build pushed stocks to 498.4 million barrels, and at 6%, opened up the widest surplus to the five-year average since mid-January.

The build was larger than expected, as analysts surveyed by S&P Global Platts had forecast crude stocks to increase by only 2.7 million barrels. Regardless, the market barely flinched, and instead chose to focus its attention on the bullish products data.

According to the EIA, US gasoline inventories and distillate inventories plummeted, falling 11.8 million barrels and 5.5 million barrels, respectively.

The market was particularly reassured by indications of a rise in gasoline and distillate demand. Implied gasoline demand jumped by more than 7% on the week to 8.73 million b/d, the strongest since early November 2020, whereas implied distillate demand surged by more than 18% on the week to 4.49 million b/d, the strongest since November 2019.

"Overall (gasoline) demand was stronger, with apparent consumption hitting over 8 million b/d as vaccinations and better weather boosted road travel. In fact, congestion in New York is rising, while toll route traffic has risen the fastest since November 2019," ANZ analysts said in a March 11 note.

Sentiment in the market also received a boost after the US House of Representatives approved a USD1.9 trillion stimulus package on March 10, after the US Senate had voted in favor of the package on March 6.

The stimulus package is expected to increase oil and energy demand by expediting global economic recovery, according to Laurence Boone, the OECD's chief economist, who told the Financial Times that it will add 1% to global economic growth.

During the March 11 morning trade, oil prices were also buoyed by the depreciation in the US dollar, which analysts said was the result of muted US inflation data bringing stability to US bond yields, and improving risk sentiment in the market. At 10:54 am, the March contract for the US dollar index was down 0.184% from the March 10 close at 91.795.

"A weaker dollar on Wednesday (March 10) supported energy prices along with better (economic) data," Avtar Sandu, Philips Futures' senior commodities manager said in a March 11 note. Sandu said that strong February credit growth in China and a robust increase in January manufacturing in France constituted the economic data supporting oil.

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 ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
MRC

MOSCOW (MRC) -- Stamicarbon, the innovation and license company of Maire Tecnimont Group and Henan Xinlianxin Chemicals Group Co. Ltd. in China, have signed licensing and equipment supply contracts for a second Ultra-Low Energy grass root urea plant, said Hydrocarbonprocessing.

The virtual signing event had all the spirit of a traditional ceremony, despite participants connecting from different countries via videoconferencing.

The first plant ever designed with Stamicarbon’s innovative LAUNCH MELT™ Ultra-Low Energy design, is also licensed to this customer and is currently in commissioning at the site of their subsidiary Jiujiang Xinlianxin Fertilizer Co. Ltd. in Jiangxi province. This new contract, was signed even before the scheduled start-up of the first plant in February. It represents the third licensing project in five years between Henan Xinlianxin Chemicals Group and Stamicarbon. It started with a revamping project signed in 2016, followed by the first Ultra-Low Energy grass root plant in 2017 and this latest contract for their second Ultra-Low Energy plant in the final days of 2020.

Stamicarbon will deliver the Process Design Package and the proprietary high pressure equipment in Safurex® and associated services for both the urea melt plant and finishing by prilling. The urea plant with a Pool Reactor will have a capacity of 2334 mtpd and is expected to start up in 2023.

The urea melt plant will feature Stamicarbon’s innovative Ultra-Low Energy design, allowing for heat to be used three times (instead of two), bringing energy savings currently unrivalled by any competitor. Thus, showing Stamicarbon’s commitment towards innovation and technology development to realize sustainable fertilizer solutions. By significantly reducing both steam and cooling water consumption, the design also substantially reduces plant operating costs (OPEX). The Ultra-Low design is not only suitable for new plants, it can also be used as a powerful revamp tool for both CO2 stripping and conventional urea plants.

As per MRC, With effect from January 1, 2011, Stamicarbon, the licensing and IP Center of Maire Tecnimont S.p.A., acquired the Italian engineering company Noy Engineering from Tecnimont. With this acquisition the extensive licensing, innovation and customer service experience of Stamicarbon is combined with the polyester and polymerization technologies of Noy Engineering. Noy Engineering designs and builds plants worldwide, based on proprietary technologies. It has developed an extensive portfolio of Polymer technologies PA6.6 & PA6, PET and Acrylic. There are more than 100 plants already designed, constructed and in operation with Noy's technologies, which is equivalent to more than 1 million metric tons per year production installed worldwide.

As per MRC, Maire Tecnimont S.p.A. announced that its subsidiaries Tecnimont S.p.A. and KT - Kinetics Technology S.p.A. have signed with SOCAR’s subsidiary Heydar Aliyev Oil Refinery two Engineering, Procurement and Construction contracts, as part of the Modernization and Reconstruction of Heydar Aliyev Oil Refinery in Baku, Azerbaijan. SOCAR is the State Oil Company of Azerbaijan Republic. The overall contracts’ value equals to approximately USD 160 million.

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, exluding producers' inventories as of 1 January, 2020).
MRC

1. India asks refiners to diversify, cut reliance on Middle East oil after OPEC+ decision

MOSCOW (MRC) -- India has asked state refiners to speed up the diversification of oil imports to gradually cut their dependence on the Middle East after OPEC+ decided last week to largely continue production cuts in April, reported Reuters with reference to two sources. India, the world's third biggest oil importer and consumer, imports about 84% of its overall crude needs with over 60% of that coming from Middle Eastern countries, which are typically cheaper than those from the West. Most of the OPEC+ producers, led by world's top exporter Saudi Arabia, last week decided to extend most output curbs into April. India, hit hard by the soaring oil prices, has urged producers to ease output cuts and help the global economic recovery. In response, the Saudi energy minister told India to dip into strategic reserves filled with cheaper oil bought last year.


MRC

MOSCOW (MRC) -- Oil prices fell after a large jump in US crude inventories in the aftermath of last month's Texas winter storm, but price declines were limited due to an upbeat forecast for global economic recovery, reported Reuters.

Brent crude lost 30 cents, or 0.4%, at USD67.22 a barrel by 11:31 a.m. EST (1631 GMT) and US West Texas Intermediate crude shed 38 cents, or 0.6%, at USD63.63 a barrel.

US crude oil stocks jumped 13.8 million barrels last week, far exceeding forecasts for a 816,000-barrel rise, as the nation's oil industry continued to feel the effects of a winter storm mid-February that stalled refining and forced production shut-ins in Texas.

Producers appear to be coming back online faster than refiners, swelling inventories, analysts said.

Crude production rose to 10.9 million barrels per day, rebounding to near levels before the freeze, while refinery utilization rates jumped 13 percentage points, but that only brought overall capacity use to 69%, far below seasonal averages for this time of year.

“This could be a little bit of a headwind for prices because the production number is coming up faster than people thought,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

The pandemic-hit global economy is set to rebound with 5.6% growth this year and expand 4% next year, the Organisation for Economic Cooperation and Development (OECD) said in its interim economic outlook. Its previous forecast had been for growth of 4.2% this year.

"When it comes to lifting market sentiment, there is very little that can rival an upgrade to the post-COVID economic recovery," said Stephen Brennock of broker PVM.

Oil prices have been steadily rallying for several months as OPEC+ - consisting of the Organization of the Petroleum Exporting Countries and allies - kept supply curbs in place. After briefly touching USD70 per barrel earlier this week, Brent crude has edged off.

OPEC+ agreed last week to largely maintain production cuts in April.

Saudi Arabia's foreign minister said that the kingdom and Russia were keen for fair oil prices and will continue their cooperation in the framework of the OPEC+ group.

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 ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
MRC

MOSCOW (MRC) -- The UAE's Abu Dhabi National Oil Co. has signed an agreement with Malaysia's Petronas to explore collaboration in the oil and gas sector of Abu Dhabi and in the low-carbon energy industry in the first such partnership between the two national oil producers, according to S&P Global.

"Under the terms of the agreement, ADNOC and Petronas will jointly explore opportunities for collaboration in the exploration, development, and production of conventional and unconventional hydrocarbon resources in the emirate of Abu Dhabi," ADNOC said in a statement March 10.

This is ADNOC's first partnership with Petronas and builds on the national oil producer's pivot toward Asia, which consumes most of its oil.

The two companies will also assess collaboration in the domestic and international downstream and trading sectors, as well as clean technology, the companies said.

"ADNOC and Petronas have also agreed to explore potential partnership opportunities in trading, including the optimization of crude and feedstock supply and refined product offtake," ADNOC said.

"In addition, they will look to collaborate to identify technology solutions as well as on hydrogen and research and development in areas of mutual interest including enhanced hydrocarbon recovery and Carbon Capture Utilization and Storage (CCUS)."

ADNOC has been striking a number of hydrogen deals with Asian countries.

The national oil producer said March 4 it is exploring opportunities to work with South Korea's GS Energy on blue hydrogen and carrier fuel export such as blue ammonia.

Japan's Ministry of Economy, Trade and Industry struck the first fuel ammonia cooperation deal with ADNOC in January as Tokyo intends to develop its supply chain of blue ammonia, possibly in the Middle East by the late 2020s.

ADNOC is also partnering with Abu Dhabi sovereign wealth funds Mubadala Investment Co. and ADQ to develop a hydrogen industry in the UAE.

ADNOC currently produces around 300,000 mt/year of hydrogen for its downstream operations and plans to expand it to more than 500,000 mt/year.

The Abu Dhabi company also plans to boost its capacity to capture CO2 from its own gas plants to 5 million mt/year of CO2 by 2030, from 800,000 mt/year now.

Separately, Petronas signed with Abu Dhabi-based clean energy company Masdar, which is owned by Mubadala, a memorandum of understanding for collaboration in renewables and hydrogen in Asia and the Middle East.

"Both parties will explore joint participation in large-scale solar and wind opportunities for utilities, commercial and industrial customers, focusing primarily on Asia," Petronas said.

"The partnership will also explore opportunities for the joint production of green hydrogen. Petronas is gearing toward commercializing low-carbon hydrogen produced from its existing facilities and is pursuing commercial production of green hydrogen in the near future."

In November 2020, Petronas announced its commitment toward net-zero carbon emissions by 2050.

Petronas New Energy, the renewables arm of the parent company, currently has over 1 GW of solar capacity in operation and development in India and Southeast Asia.

As MRC reported previously, in early May, 2020, Abu Dhabi National Oil Company (ADNOC) began a gradual restart of its Ruwais oil refinery complex after a scheduled maintenance shutdown. The Ruwais complex, which has capacity of 835,000 barrels per day, was shut down early this year, the ADNOC spokesman said.

And in late July 2019, ADNOC said its Ruwais refinery west cracker was offline for maintenance.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.

Petronas, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company wholly owned by the Government of Malaysia. The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment.
MRC