MOSCOW (MRC) -- Crude oil futures declined during the mid-morning trade in Asia July 19, as the market participants were concerned over a rise in supply following an OPEC+ deal to an impending increase in production quotas, while the rapid spread of the Delta variant of the coronavirus raised worries about the re-imposition of demand-sapping mobility restrictions, reported S&P Global.
At 10:53 am Singapore time (0253 GMT), the ICE September Brent futures contract was down USD1.20/b (1.63%) from the previous close at USD72.39/b, while the NYMEX August light sweet crude contract was down USD1.14/b (1.59%) at USD70.67/b.
"A cocktail of bearish factors are causing the fall in prices we are
The OPEC+ producer group, on July 18, reached a deal to increase its production quotas by 400,000 b/d each month starting in August, amounting to a 2 million b/d total increase by the end of the year. The agreement also involved an extension of the coalition's supply management pact through to 2022.
The OPEC+ resolution puts an end to an acrimonious spat between Saudi Arabia and the UAE, which had arisen after the UAE had objected to Saudi Arabia's plan to tie OPEC+ production increases to a lengthening of the supply management pact, insisting that its baseline production level, from which its quota is determined, be raised first.
In an appeasement to the UAE, the country will receive a 332,000 b/d boost to its reference production level, from which quotas are determined, starting in May 2022. Meanwhile, Saudi Arabia and Russia will also be granted 500,000 b/d baseline increases, with Iraq and Kuwait getting 150,000 b/d rises.
While the compromise has brought more clarity to the supply-side of the equation in the market, it has failed to alleviate concerns of a potential breakdown in OPEC+ unity.
Meanwhile, analysts also said that the rapid spread of the Delta variant of the coronavirus has also soured sentiment in the market, as countries around the world consider tightening or have tightened mobility restrictions.
As MRC informed earlier, OPEC stuck to its forecast for a strong recovery in world oil demand in the rest of 2021 and predicted oil use would rise in 2022 at similar to pre-pandemic rates, led by growth in the United States, China and India.
We remind that China's crude oil imports fell 3% from January to June versus a year earlier, in the first first-half contraction since 2013, as an import quota shortage, refinery maintenance and rising global prices curbed buying. Imports totalled 40.14 million tonnes last month, data released by the General Administration of Customs showed on Tuesday, equivalent to 9.77 million barrels per day (bpd).
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 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High denisty polyethylene (HDPE) shipments decreased. At the same time, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.
MRC