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Crude futures mainly steady as COVID-19 concerns counter signs of economic recovery

April 13/2021

MOSCOW (MRC) -- Crude oil futures were steady to slightly higher in mid-morning trade in Asia April 12 as optimism over an accelerated vaccination drive in Europe and an economic recovery in the US were countered by continuing concerns that any resurgence in coronavirus infections could abruptly curtail demand, reported S&P Global.

At 11:52 am Singapore time (0352 GMT), the ICE Brent June contract was up 4 cents/b (0.06%) from the April 9 settle at USD62.99/b, while the May NYMEX light sweet crude contract was 4 cents/b (0.07%) higher at USD59.36/b.

"The market started the week on a positive note after a tug of war between those feeling optimistic over the US economic recovery and those despairing over the pandemic progression in Europe left Brent stuck around the USD63/b mark last week," Vandana Hari, CEO of Vanda Insights, told S&P Global Platts on April 12.

"The positive sentiment was due to developments over the weekend, with France, Germany and Italy saying that they are ramping up vaccinations and Jerome Powell (US Federal Reserve Chairman) expressing further confidence over US economic growth accelerating," she added.

However Hari noted the market had not found strong upward momentum amid continuing concerns that the coronavirus pandemic could derail the demand recovery for crude oil. "Europe is at the epicenter of (coronavirus-related concerns), with several countries forced to increase restrictions to contain the spread of new variants of the virus," ANZ analysts said in a April 12 note.

As MRC informed earlier, 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 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 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.
Author:Margaret Volkova
Tags:Europe, PP, PE, crude and gaz condensate, PP block copolymer, homopolymer PP, propylene, LDPE, HDPE, ethylene, petrochemistry, Gazprom neft, Sibur Holding, Shurtans Gas-Chemical Plant, Russia, USA, Uzbekistan.
Category:General News
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