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Crude oil futures rangebound in Asia as investors monitor pandemic situation in India and Japan

April 26/2021

MOSCOW (MRC) -- Crude oil futures were rangebound during mid-morning trade in Asia April 26, as fundamentals in the market remained unchanged and investors exercised caution amid the deteriorating pandemic situation in India and Japan, and ahead of the OPEC+ meeting scheduled for later this week ending April 30, reported S&P Global.

At 10:50 am Singapore time (0250 GMT), the ICE Brent June contract had slipped 8 cents/b (0.12%) from the April 23 settle at USD66.03/b, while the June NYMEX light sweet crude contract was 2 cents/b (0.03%) higher at USD62.16/b.

Investors exercised caution during mid-morning trading on lingering concerns over the deteriorating pandemic situation in parts of Asia.

Japan, confronted with a rise in COVID-19 infections, has placed the Tokyo, Osaka, Hyogo and Kyoto prefectures under a state of emergency until May 11, media reports showed. The situation in India seems even more dire, with the country reporting a record 349,691 COVID-19 infections on April 24. Over the weekend, Delhi Chief Minister Arvind Kejriwal announced an extension in the capital's lockdown until May 3, while other parts of the country, including Mumbai, also remained under lockdown.

"The market is looking at the evolving situation in India, which has raised some concerns about the demand outlook for oil in the region," Warren Patterson, head of commodities strategy at ING told S&P Global Platts on April 26.

He added that the escalation of the pandemic in India, the third largest importer of crude, will be on the minds of the OPEC+ coalition when it meets on April 28 to review its earlier decision to ease production cuts from May onwards.

Analysts, including Patterson, however, ultimately believe that the meeting is likely to conclude without any surprises, and that the coalition will increase production as scheduled. Analysts, however, have cautioned that news flow from the meeting may draw attention to the impending supply increase, and consequently dampen sentiment.

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 polyethylene (PE) consumption totalled 356,370 tonnes in the first two month of 2021, down by 9% year on year. Shipments of exclusively low density polyethylene (LDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market was 246,870 tonnes in January-February 2021, up by 30% year on year. 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, ethylene, petrochemistry, Gazprom neft, Sibur Holding, Shurtans Gas-Chemical Plant, India, Russia, USA, Uzbekistan, Japan.
Category:General News
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