MOSCOW (MRC) -- Crude oil futures ticked lower during mid-morning trade in Asia June 29, extending the overnight downtrend, as the spread of the delta variant of the coronavirus raised concerns over renewed mobility restrictions, reported S&P Global.
At 10:55 am Singapore time (0255 GMT), the ICE August Brent futures contract was down 34 cents/b (0.46%) from the previous close at USD74.34/b, while the NYMEX August light sweet crude contract was down 28 cents/b (0.38%) at USD72.63/b. This downtrend continues from overnight when front month Brent and NYMEX light sweet crude markers closed 1.97% and 1.54% lower at USD74.68/b and USD72.91/b, respectively.
Analysts said the market is pricing the possibility of tighter mobility restrictions after an increase in COVID-19 infections across much of Europe and Asia.
Despite its high vaccination rate, the UK has seen a surge in COVID-19 infections since January, reporting 22,868 COVID-19 infections on June 28, the highest since late January. This uptrend has been driven by the more transmissible delta variant of the coronavirus.
"Every time we see a rise in COVID-19 cases, the first thing that comes to traders' minds is that governments may rush to renew lockdown restrictions and tighten border controls, decimating oil demand. This is reflected in the prices we are currently seeing," David Lennox, resource analyst at Fat Prophets told S&P Global June 29.
To Lennox's point, Hong Kong, Spain and Portugal, among other countries, have moved to place new restrictions on travelers from the UK. Furthermore, German Chancellor Angela Merkel on June 28, proposed a total ban on UK arrivals across the EU, but Merkel's plans have yet to gain traction.
Analysts said the elevated numbers in the UK have led to fears that other countries, where vaccination has thus far driven down infection rates, may also succumb to the delta variant of the virus.
The spread of the delta variant of the virus was cited by analysts as one of the reasons why the OPEC+ coalition will take a cautious approach to rolling back its production quotas. The producer group has met with several calls to raise oil production to prevent a supply shortfall, and to ensure affordable energy prices that are conducive to a global economic recovery.
OPEC+ is currently holding crude production at 6.2 million b/d below October 2018 levels and intends to taper this output cut to 5.76 million b/d in July.
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