MOSCOW (MRC) -- Crude oil futures were steady to lower in mid-morning trade in Asia Oct. 1 amid a stronger dollar, while the outlook remained bullish in the lead-up to an OPEC+ meeting scheduled for Oct. 4, reported S&P Global.
At 10:30 am Singapore time (0230 GMT), the ICE December Brent futures contract was down 14 cents/b (0.18%) from the previous close at USD78.17/b, while the NYMEX November light sweet crude contract was 12 cents/b (0.16%) lower at USD74.91/b.
Crude prices are entering into consolidation mode as energy traders await the OPEC+ meeting on output," OANDA Senior Market Analyst Edward Moya said in a note Oct. 1, adding the strengthening dollar was also impacting oil prices.
OPEC+ will meet Oct. 4 to discuss whether to expand its existing agreement of increasing production by 400,000 b/d. The group has recently come under pressure for capping its monthly production increases at 400,000 b/d amid an increase in global demand.
ING research analysts in a note Oct. 1 said it was safe to assume given the current environment that an increase of at least 400,000 b/d was guaranteed for November, adding the greater uncertainty was whether the group would be willing to ease production caps more aggressively.
The stronger dollar was adding headwinds to oil prices. The dollar index stood at 94.32 at 0230 GMT, up 0.1% from the previous close. A stronger dollar makes dollar-denominated assets such as oil more expensive for buyers holding foreign currency, thus dampening demand.
Despite the dip in crude oil prices in early Asian trade, several analysts noted that fundamental remained bullish. The Chinese government has asked state-owned energy companies to build and ensure adequate reserves to meet power needs for winter, which had seen crude prices end higher Sept. 30.
Reflecting similar sentiment, ANZ research analysts noted that refinery offtake continued to remain strong amid attractive margins, while China was preparing to buy more energy to avoid a supply crunch.
We remind that, as MRC wrote earlier, Japanese and Indian refiners said Sept. 28 they were cautiously optimistic about the regional oil demand reaching pre-pandemic levels, as the pace of recovery gains momentum due to lower COVID-19 infections, with India taking slightly longer to get there. Higher demand for fossil fuels gasoline and diesel was leading the recovery in Asia, with the consumption in some countries already past the pre-pandemic levels, but weak jet fuel demand was a drag.
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 January-July 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.
MRC