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Crude oil futures rise on stronger demand outlook, weaker dollar

April 14/2021

MOSCOW (MRC) -- Crude oil futures increased in mid-morning trade in Asia April 14, despite a pause in the Johnson & Johnson vaccine rollout and mixed data from the American Petroleum Institute, as the market remained buoyed by OPEC raising its 2021 oil demand forecast and a weaker dollar, reported S&P Global.

At 10:36 am Singapore time (0236 GMT), the ICE Brent June contract was up 42 cents/b (0.66%) from the April 13 settle at USD64.09/b, while the May NYMEX light sweet crude contract was 42 cents/b (0.7%) higher at USD60.60/b.

In its closely watched monthly oil market report released April 13, OPEC raised its 2021 crude oil demand forecast by 190,000 b/d from the March estimate, citing economic stimulus programs and a further easing of COVID-19 lockdown measures. OPEC now expects crude consumption to average 96.46 million b/d in 2021, up 5.95 million b/d year on year.

OPEC's improved demand outlook comes ahead of a scheduled easing of production cuts by the OPEC+ coalition, which is due to add 350,000 b/d of crude output in May, another 350,000 b/d in June and 441,000 b/d in July. Saudi Arabia has also announced that it will unwind its additional 1 million b/d unilateral cut by 250,000 b/d in May, 350,000 b/d in June and 400,000 b/d in July.

The market also received a boost from a weaker dollar, which makes US-denominated assets such as oil futures more attractive to buyers holding foreign currency. At 10:36 am, the June contract for ICE dollar futures was trading at 91.730, down 0.449% from its previous settle.

Oil markets largely shrugged off reports linking the Johnson & Johnson vaccine to blood clots similar to those experienced by a small number of Oxford-AstraZeneca vaccine recipients. The US Food and Drug Administration has recommended pausing the use of the vaccine and Johnson & Johnson has announced it will delay its rollout in Europe, according to media reports.

"WTI crude is also benefitting from a weaker dollar and mostly on continued optimism that AstraZeneca and J&J's setback will be temporary and that the world will still be able to get their hands on other COVID-19 vaccines," Edward Moya, senior market analyst at OANDA, said in an April 14 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:Asia, PP, PE, crude and gaz condensate, PP block copolymer, homopolymer PP, propylene, LDPE, HDPE, ethylene, medicine, petrochemistry, Gazprom neft, Sibur Holding, Shurtans Gas-Chemical Plant, Russia, Saudi Arabia, USA, Uzbekistan.
Category:General News
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