MOSCOW (MRC) -- Crude oil futures jumped during morning trade in Asia June 16, as data from the American Petroleum Institute showed a large draw in US crude inventories, and as the market continued to buy into the global demand recovery narrative, reported S&P Global.
At 10:23 am Singapore time (0223 GMT), the ICE August Brent futures contract was up 62 cents/b (0.84%) from the previous settle at USD74.61/b while the NYMEX July light sweet crude contract was up 59 cents/b (0.82%) at USD72.71/b.
The rise in prices came as API data, released June 15, indicated improved fundamentals in the market, showing an 8.54 million-barrel decline in US crude inventories in the week ended June 11.
Given the striking crude draw figure, markets largely overlooked more bearish downstream product inventory data, which showed US gasoline and distillate inventories rising by 2.85 million barrels and 1.96 million barrels, respectively.
Part of the reason why the markets dismissed the downstream product inventory data was that US product demand, especially US gasoline demand, remains robust amid rising vaccination rates and easing mobility restrictions.
The improving pandemic situation in the US is best exemplified by New York, whose Governor Andrew Cuomo on June 15 lifted most pandemic-related restrictions after the statewide vaccination rate for adults hit the 70% threshold, according to media reports. Meanwhile, California, which now has one of the lowest infection rates in the country, also did the same on June 15, media reports said.
Even prior to the removal of these restrictions, the improving pandemic situation in the US was already having an effect on the country's traffic conditions.
A similar trend was seen across Europe, which market analysts said was supportive of the sentiment for oil. With a demand recovery also expected in major Asian economies, where COVID-19 infection numbers have also been on a downtrend, the market expects prices to continue their hot streak.
"Even non-energy traders are placing bets that oil prices will continue to rise," Edward Moya, senior market analyst at OANDA, said in a June 16 note.
"The crude demand outlook is very robust as recoveries across the US, Europe and Asia will have demand return to pre-COVID levels in the second half of next year," he reasoned.
The rosy demand outlook and potential supply constraints have led to traders entertaining the idea of oil prices reaching USD100/b this year.
We remind that as MRC informed earlier, Indian refiners, anticipating a lifting of US sanctions, plan to make space for the resumption of Iranian imports by reducing spot crude oil purchases in the second half of the year. The world"s third-largest oil consumer and importer halted imports from Tehran in 2019 after former US President Donald Trump withdrew from a 2015 accord and re-imposed sanctions on the OPEC producer over its disputed nuclear programme.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.
MRC