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Crude oil drops in Asia on profit-taking activity

July 23/2021

MOSCOW (MRC) -- Crude oil ticked lower during the mid-morning trade in Asia July 23 on profit-taking activity, following a recent rally that saw futures prices claw back losses from a selloff at the start of the week, reported S&P Global.

At 10:45 am Singapore time (0245 GMT), the ICE September Brent futures contract was down 23 cents/b (0.31%) from the previous close at USD73.56/b, while the NYMEX September light sweet crude contract was down 23 cents/b (0.32%) at USD71.68/b.

The downtick in prices during the morning trade comes as the market cools off after a rally that saw the front-month ICE Brent and NYMEX light sweet crude markers rising roughly 8% over July 20-22, paring back losses from a selloff that saw both markers plummet at the beginning of the week on July 19.

Despite the slight fall in prices, analysts remain optimistic that the oil market is in the middle of a recovery. Concerns over the spread of the highly transmissible delta variant of the coronavirus have taken a backseat, supplanted by optimism over rising oil demand as the world fuels its economic recovery.

The Energy Information Administration report, released late July 21, showed implied downstream oil products demand rising 6.62% on the week to 20.6 million b/d in the week ended July 16. This trend is also seen in Europe, where road activity and air travel are both on the rise.

As the rising demand trend defies the surge in COVID-19 infections, there are now concerns that supply may not be able to keep up.

The OPEC+ coalition had, 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, with the production rises also expected to continue next year.

However, with the supply-side response from US shale producers likely to remain conservative, as highlighted by oil services provider Baker Hughes in its second-quarter earnings call, there are concerns in the market that the OPEC+ output increase may fall short of the amount needed to balance the market.

As MRC informed earlier, Saudi Arabia, the world's top crude oil exporter, will supply full contractual volumes of August-loading crude to at least five Asian customers. However, Saudi Aramco has turned down two of the buyers' requests for extra barrels.

We remind that Mukesh Ambani, chairman and managing director of Reliance Industries Ltd (RIL), said in June he expects the company's deal with Saudi Aramco to materialise this year. Meanwhile, Yasir Al-Rumayyan, chairman of Saudi Aramco and the Governor of the Public Investment Fund, joined the board of Reliance as an independent director.

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.
Author:Margaret Volkova
Tags:Asia, Europe, medicina, crude and gaz condensate, United Arab Emirates (UAE), Saudi Arabia, USA.
Category:General News
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