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Crude oil futures continue upward trend amid tightening supply outlook

October 18/2021

MOSCOW (MRC) -- Crude oil futures continued their upward climb during mid-morning trade in Asia Oct. 18, hitting fresh multi-year highs as the supply and demand outlook remained supportive for prices and investors weighed the possibility of a return of Iranian oil, reported S&P Global.

At 10:52 am Singapore time (0235 GMT), the ICE December Brent futures contract was up 94 cents/b (1.1%) from the previous close at USD85.87/b, a high not seen since October 2018. The NYMEX November light sweet crude contract rose USD1.33/b (1.61%) at USD83.60/b. It was last higher on October 2014.

"[Last week was] the eighth consecutive week that crude oil has registered weekly gains, signaling strong bullish momentum behind this rally," analysts at OCBC Treasury Research said in a note.

"Easing restrictions around the world are likely to help the recovery in fuel consumption. The jet fuel market was buoyed by news that the US will open its borders to vaccinated foreign travelers next month," analysts at ANZ Research said.

Investors were now eyeing Iranian talks that are set to resume this week, about four months after negotiations were delayed as a new ultra conservative administration took office.

Analysts said the likelihood of a return of Iranian oil to global export markets was unclear.

US Special Envoy for Iran Robert Malley warned of that possibility Oct. 13, saying: "We have to prepare for a world ... where Iran doesn't have constraints on its nuclear program and we have to consider options for dealing with that, even as we hope that we can get back to the deal."

Investors have piled long positions in the ICE Brent and NYMEX light sweet crude contracts in recent weeks, amid the improving sentiment for crude oil. Speculative net longs in ICE Brent crude as of Oct. 5 stood at 332,677 lots, most recent data from ICE showed, a high not seen since March 16.

Speculative net longs in the NYMEX light sweet crude contract meanwhile, stood at 326,605 lots as of Oct 12, a high not seen since July 31, according to data from the US Commodity Futures Trading Commission.

With oil prices hovering at such lofty heights, market watchers have said this will likely prompt a sharp return in production, particularly in the US, threatening the medium-term outlook for oil.

TotalEnergies CEO Patrick Pouyanne said late last week that US shale industry may prove unable to resist ramping up activity to produce more crude oil.

As MRC wrote before, Indian Oil Corp, the country's top refiner, said in May, 2021, that it would resume purchases of Iranian oil if Washington lifts sanctions against Tehran over its disputed nuclear programme.

Besides, Bharat Petroleum Corporation Ltd (BPCL) said then it can buy up to 2 million tons of crude oil from Iran if sanctions are lifted and terms are attractive.

We remind that in April, 2020, BPCL shipped the first consignment of acrylic acid from its Propylene Derivative Petrochemical (PDP) complex at Kochi Refinery. Acrylic Acid is one of the six niche petrochemical products produced in the new PDP Complex at Kochi Refinery.

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.
Author:Margaret Volkova
Tags:Asia, PP, PE, crude and gaz condensate, propylene, ethylene, petrochemistry, Bharat Petroleum, Indian Oil Corp, Total Petrochemicals, India, Iran, USA.
Category:General News
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