MOSCOW (MRC) -- Oil prices fell for a third day, as a recovery in demand was threatened by rising US inventories and moves by Germany, France and some other European states to suspend the use of a major coronavirus vaccine, reported Reuters.
Brent was down USD1.11 cents, or 1.6%, at USD67.77 a barrel by 1325 GMT. U.S. crude fell USD1.17, or 1.7%, at USD64.22.
Germany, France and Italy said they would suspend the use of the Oxford/AstraZeneca vaccine after reports about possible serious side effects, although the World Health Organization said there was no established link to the vaccine.
The moves deepen concerns about the slow pace of vaccinations in the European Union, threatening an economic recovery and fuel demand.
The pandemic eviscerated demand for oil. Prices have recovered to levels seen before the global health crisis, but gains have been capped as vaccine rollouts have proceeded slowly in many countries.
In the United States, crude inventories are also rising as refineries have taken time to recover fully from a "big freeze" that halted their operations in Texas and elsewhere.
"Short-term direction will be set by the weekly US inventory reports," PVM analysts said in a note, adding that the dollar's strength against other currencies also weighed on the oil price.
Analysts expect another week of inventory gains when the American Petroleum Institute, an industry group, reports on crude stockpiles on Tuesday, followed by official numbers from the Department of Energy on Wednesday.
Inventories rose by 12.8 million barrels in the week to March 5, against forecasts for a rise of less than 1 million barrels.
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.
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