Crude oil futures rise in Asia amid firming fundamentals and higher US crude stocks

Crude oil futures rise in Asia amid firming fundamentals and higher US crude stocks

MOSCOW (MRC) -- Crude oil futures were higher during mid-morning trade in Asia trade Sept. 22 amid firming fundamentals and a draw in US crude stocks, reported S&P Global.

At 10:30 am Singapore time (0230 GMT), the ICE November Brent futures contract was up 50 cents/b (0.67%) from the previous close at USD74.86/b, while the NYMEX November light sweet crude contract was 59 cents/b (0.84%) higher at USD71.08/b.

"Crude oil prices pared losses as the risk-off tone of the market subsided and the focus shifted back to strong fundamentals," ANZ research analysts said in a Sept. 22 note, adding sentiment had received a further boost from the US repealing a ban on foreign travelers, which could add more than 190,000 b/d of jet fuel demand in November.

Highlighting tight supply as demand improves, US oil producers were still working to bring back production stalled by Hurricane Ida three weeks ago.

The US Bureau of Safety and Environmental Enforcement reported Sept. 21 that around 320,909 b/d or 16.64% of the Gulf's oil production remains offline, while about 566.67 MMcf/d or 25.42% of gas production remains shut.

Despite the proportion of offline production easing, supply is still expected to remain tight after Shell reported that full recovery in the Gulf looks unlikely in the near term as damage to its facilities will push the resumption of full capacity in the region to the first quarter of 2022.

The dollar was also seen volatile as the Federal Reserve's Open Market Committee began a two-day meeting that is widely expected to end in the US central bank pursuing a more hawkish monetary policy. The US Dollar Index edged down to 93.19 in mid-morning trading in Asia from the Sept. 21 close at 93.20.

The American Petroleum Institute reported late Sept. 21 that US crude stocks fell 6.11 million barrels in the week ended Sept. 17, after reporting a 5.4 million-barrel draw the week before, outpacing analyst expectations of a 2.4 million-barrel draw. US gasoline inventories fell 432,000 barrels in the week, while distillate stocks fell 2.72 million barrels, the API said.

As informed earlier, Shell said earlier this month it observed damage from Hurricane Ida to its transfer station West Delta-143 offshore facilities in the Gulf of Mexico. West Delta-143 serves as the transfer station for all production from its assets in the Mars corridor in the Mississippi Canyon area of the Gulf of Mexico to onshore crude terminals. Shell said then it was not yet safe to send personnel offshore to learn the full extent of the damage and estimate the effect on production.

We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.

We also remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.
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Formosa resumes normal operations at its PVC plant in Baton Rouge after Hurricane Ida

Formosa resumes normal operations at its PVC plant in Baton Rouge after Hurricane Ida

MOSCOW (MRC) -- Formosa Plastics USA, part of Formosa Petrochemical, restarted its polyvinyl chloride (PVC) plant in Baton Rouge, Louisiana, post-Ida on September 11, 2021, reported S&P Global with reference to sources familiar with company operations.

This plant with the capacity of 513,000 mt/year of PVC was shut on 29 August, 2021, ahead of Hurricane Ida.

Formosa declared force majeure on PVC on 3 September, 2021, in light of reduced output after the storm's assault, according to a customer letter seen Sept. 7.

As MRC wrote previously, Formosa Plastics USA has postponed the start-up of its expanded PVC production capacities at its existing plant in Baton Rouge, Louisiana, to Q4 2022. Initially, the company planned to launch the expanded capacities at its 513,000 mt/year of PVC plant in Q4 2021. Formosa did not respond to inquiries about the delay. The company intends to debottleneck production at this plant, adding 130,077 mt/year of PVC capacity, according to permitting documents.

According to MRC's ScanPlast report, Russia's overall production of unmixed PVC totalled 580,500 tonnes in the first seven months of 2021, up by 4% year on year. At the same time, one producer reduced its output.

Formosa Petrochemical is involved primarily in the business of refining crude oil, selling refined petroleum products and producing and selling olefins (including ethylene, propylene, butadiene and BTX) from its naphtha cracking operations. Formosa Petrochemical is also the largest olefins producer in Taiwan and its olefins products are mostly sold to companies within the Formosa Group. Among the company's chemical products are paraxylene (PX), phenyl ethylene, acetone and pure terephthalic acid (PTA). The company"s plastic products include acrylonitrile butadiene styrene (ABS) resins, polystyrene (PS), polypropylene (PP) and panlite (PC).
MRC

Ukraine GDP up by 5.7% in Q2 2021 - State Statistics Service

MOSCOW (MRC) -- Ukraine's real gross domestic product (GDP) increased in the second quarter of 2021 by 5.7% year on year, reported Ukrainian media outlet "Economicheskaya pravda" , citing the State Statistics Service.

At the same time, this figure was influenced by the effect of the low comparison base. In Q2 2020, Ukraine's GDP fell by 11.2% during the period of the most stringent quarantine restrictions.

At the same time, in Q2 2021, GDP dropped by 0.7% from the first quarter, given the seasonal factor.

Nominal GDP totalled UAH1.17 trillion, and GDP per capita was at UAH28,190 (+ 6.4% year on year).

According to the Ministry of Economy's calculations, Ukraine's GDP grew in the first seven months of 2021 by 2.1%, compared to a fall of 6.1% in 2020.

As reported earlier, in April 2021, the IMF predicted GDP growth in Ukraine in 2021 at 4% against 3% in the October report. In 2022, the growth will be 3.4%.

We remind that the European Bank for Reconstruction and Development (EBRD) improved its forecast for the growth of the Ukrainian economy in 2021 from 3% to 3.5%, as evidenced by its June forecast.
MRC

The Ministry of Economy of Russia raised the forecast for GDP growth in 2021 to 4.2%

MOSCOW (MRC) - Russia's GDP in 2021 will grow to 4.2% instead of the projected 3.8%, said State Secretary and Deputy Minister of Economy Alexei Khersonsev, Kommersant reports.

In July, the department sent to the regions an interim version of the forecast, which assumed economic growth by 3.8%. The head of the Ministry of Economy, Maxim Reshetnikov, spoke about the revision of the forecast to 4.2% in early September.

"We have raised the estimate of GDP for the current year to 4.2%," confirmed on 21 September, Mr. Khersonsev, speaking at an expanded meeting of the Federation Council Committee on Economic Policy.

In August, Rosstat estimated economic growth in the second quarter of 2021 at 10.3%, slightly better than the expectations of the market and the Ministry of Economy. This reflects an improvement in output in the main sectors, which was largely supported by an increase in household credit burden and a decline in savings.

Earlier it was reported that the gross domestic product (GDP) of the Russian Federation for the first half of 2021 increased by 4.6% compared to the same period last year, Interfax reported, citing data from the Ministry of Economic Development (MED). Against the background of a low base last year in June 2021, the annual GDP growth of the Russian Federation amounted to 8.5% after growing by 11.1% in May and by 10.8% in April. In the second quarter, GDP increased by 10.1% compared to the same quarter of 2020 after falling by 0.7% in the first quarter (while the ministry did not provide an estimate of growth for the first half).
MRC

Chinese jet fuel exports to rise significantly in September amid domestic COVID-19 travel restrictions

Chinese jet fuel exports to rise significantly in September amid domestic COVID-19 travel restrictions

MOSCOW (MRC) -- Chinese jet fuel exports are expected to exceed 1 million mt in September, a level not seen since April 2020 and well above the average monthly 663,000 mt exports over January-August, as the country's latest COVID-19 travel restrictions has severely impacted air travel to and from the southern province of Fujian, multiple industry sources told S&P Global Sept. 21.

This is the latest setback to the sustained recovery in the Asian jet fuel market amid rising COVID-19 infections in many countries in the region.

Given the surge in the number of COVID-19 cases in Fujian, Chinese authorities have imposed tighter travel restrictions out of Putian, Quanzhou, and Xiamen as of Sept. 14 to contain the virus spread.

The delta variant infections, which initially started at Nanjing and Guangzhou, has dragged the country's air passenger traffic lower since H2 July. Since then, local authorities have tightened preventive measures at two of the country's busiest air hubs, heavily reducing passenger flow. Air travel was expected to pick up in July and August during the school holidays, however, the spread of the delta variant since H2 July has delayed this recovery.

Commercial flights, on the other hand, have declined 50% in mid-August from mid-July, according to data from global flight tracker, Radar Box.

Prior to the latest set back in Fujian, flight flow had shown a robust comeback with the virus spread under control. During the first week of September, commercial flights had risen nearly 60% from the mid-August low, while Nanjing airport restarted operations Aug. 26.

The latest travel restrictions in Fujian may impact the 240,000 b/d Quanzhou refinery operated by state-owned Sinochem, sources told S&P Global.

"With domestic jet fuel demand in the province likely to be weighed (down) by the latest travel restrictions, the refinery may have to look to the export market to relieve some inventory pressure, especially with elevated run rates this month in response to the anticipated surge in jet fuel demand over the seven-day long (National Day) holidays in early October," a Singapore-based trader said Sept. 20.

A Sinochem source said the situation would force the company to concentrate on jet fuel exports from its Quanzhou refinery for the rest of 2021.

As MRC informed before, in December 2020, KBR announced that Sinochem Quanzhou Petrochemical Co. had successfully commissioned a new ethylene facility in Quanzhou, Fujian Province, China, utilizing KBR's SCORE (Selective Cracking Optimum Recovery) technology. The 1-million-t/y ethylene plant is part of Sinochem's grassroots integrated refining and petrochemical complex, which also includes a 400,000-t/y high-density polyethylene (HDPE) facility, which recently achieved on-spec production, as well as an 800,000-t/y paraxylene (PX) plant, a 350,000-t/y polypropylene (PP) unit and an aromatics extraction unit with 300,000 t/y of capacity.

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 1,396,960 tonnes in the first seven months of 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of statistical copolymers of propylene (PP random copolymers) subsided.
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