Winter chill set to keep oil prices near USD80 a barrel in late 2021

Winter chill set to keep oil prices near USD80 a barrel in late 2021

MOSCOW (MRC) -- Oil prices will hold near USD80 as the year ends, as tight supplies and higher gas bills encourage a switch to crude for power generation, a Reuters poll showed on Friday.

The survey of 41 analysts and economists forecast benchmark Brent crude to average USD70.89 a barrel in 2021, the highest forecast for the yr since April 2019.

It falls short of the $100 a barrel level mooted by some producers and forecasters and compares with an average price of USD69.52 so far this year.

Prices are forecast to average USD80.92 a barrel in the fourth quarter this year and USD78.74 in the subsequent quarter.

"The main factors affecting oil prices will continue to be related to the energy crunch in Europe and the switching from natural gas to oil derivatives," Matthew Sherwood, Global Economist at the Economist Intelligence Unit, said.

However, that could ease from about the middle of 2022 as the United States responds by pumping more oil, Sherwood added.

The poll forecast US crude at USD68.62 per barrel, the highest 2021 forecast since March 2017. West Texas Intermediate was seen averaging USD78.06 in the current quarter and at USD75.68 in the first quarter of 2022.

Analysts estimate global fuel demand to increase by 5-6 MM barrels per day (bpd) this year.

Both crude benchmarks are trading near multi-year highs, boosted by an ongoing supply squeeze across the globe as demand has largely returned to pre-pandemic levels. This has also contributed to soaring coal and natural gas prices.

Additionally, the emergence of more COVID variants, the Iran nuclear deal and central banks' response to rising inflation driven by spiking energy prices will be crucial factors in the coming months, analysts said.

As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.

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.
MRC

Sinopec net profits up 149% in Jan-Sep on recovering demand

Sinopec net profits up 149% in Jan-Sep on recovering demand

MOSCOW (MRC) -- Sinopec posted a net profit increase of 148.5% in the first nine months amid strengthening crude and firming products demand, the company said.

In accordance with IFRS, net profit attributable to shareholders of the Company was RMB 60.755 billion, increased 148.5%. Basic earnings per share were RMB 0.502. In accordance with CASs, the Company's operating income in the first three quarters was RMB 2.0034 trillion, up by 29.0% year on year. Net profit attributable to equity shareholders of the Company reached RMB 59.892 billion.

During the first three quarters, the Company achieved good performance in operation and profitability. Oil and gas production, refinery throughput, total domestic sales volume of refined oil products and total chemical products sales volume recorded year on year increase. Operating profit was RMB 84.806 billion, representing a year on year increase of 1578.3%.

In accordance with IFRS, the Company's liability-to-asset ratio as of 30 September 2021 was51.78%, maintaining a sound financial position.Net cash generated from operating activities up by 37.4% year on year. Cash and cash equivalents amounted to RMB 203.955billion(including time deposits) as at 30 September 2021.

In the first three quarters of 2021, as the world economy gradually picked up, China's economy kept a sustainable and steady recovery, registering a GDP growth of 9.8% year-on-year among which up by 4.9% in the third quarter. In the first three quarters the average spot price of Platts Brent was USD67.73 per barrel, up by 65.9% year-on-year. Domestic demand for natural gas continued to grow rapidly, with an apparent consumption up by 16.6% year-on-year. Domestic demand for refined oil products recovered steadily and demand for major chemicals sustainedstable.

As MRC informed before, in August, 2021, Sinopec, the world's petrochemical major, launched the first phase of the Gulei refining complex in Zhangzhou city in China’s southeastern Fujian province. The refining complex, a 50:50 joint venture between Sinopec’s Fujian Petrochemical Company Ltd and Taiwan Xuteng Investment Company Ltd, invested 27.8 billion yuan (USD4.28 billion) in the first phase. That will result in an 800,000 tonnes per annum ethylene plant, a 600,000 tonnes per annum styrene unit and seven other downstream petrochemical units, Sinopec said.

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.

China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group's key business activities include the exploration and production of oil and natural gas, petrochemicals and other chemical products, oil refining.
MRC

LyondellBasell expects to sell its Houston refinery in next quarter or two

LyondellBasell expects to sell its Houston refinery in next quarter or two

MOSCOW (MRC) -- LyondellBasell Industries expects to sell its Houston refinery in the “coming quarter or two,” said Chief Executive Bob Patel during a Friday conference call with Wall Street analysts, reported Reuters.

The chemical maker said on Sept. 8 it was considering strategic options for the refinery, located on the Houston Ship Channel. LyondellBasell tried to sell the refinery in 2016 but was stymied by unit fires and multiple unit shutdowns before it took the plant off the market in a dispute over price.

“Our aim is to move towards the transaction in the coming quarter or two,” Patel said. “We still continue to believe that the best value that this refinery can create is by being part of a system where it can be optimized from crude purchasing to logistics, to the coproduct processing.”

The Houston refinery ran at 99% of its 263,776 barrel-per-day (bpd) capacity in the third quarter of 2021, as the chemical maker continues to market the plant to potential buyers, the company said on Friday. The refinery ran at 260,000 bpd in the third quarter, 12,000 bpd more than it did in the second quarter of 2021, recording operating income of USD25 million in third quarter, up from a USD95 million loss in the second quarter, the company said.

As MRC informed earlier, three US subsidiaries of Dutch chemical giant LyondellBasell Industries N.V. (LBI) have agreed to make upgrades and perform compliance measures estimated to cost USD50 million to resolve allegations they violated the Clean Air Act and state air pollution control laws at six petrochemical manufacturing facilities located in Channelview, Corpus Christi, and LaPorte, Texas, and Clinton, Iowa, according to the Department of Justice and the US Environmental Protection Agency's (EPA) statement.

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 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges, like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road, and ensuring the safe and effective functionality in electronics and appliances. LyondellBasell sells products into more than 100 countries and is the world"s largest producer of polymer compounds and the largest licensor of polyolefin technologies. In 2020, LyondellBasell was named to Fortune Magazine"s list of the "World"s Most Admired Companies" for the third consecutive year.
MRC

Pemex reported loss for the third quarter of 2021

MOSCOW (MRC) -- Mexican state energy producer Pemex reported a larger Q3 comprehensive loss because of unfavourable exchange rates, said the company.

Such rates resulted in a Q3 charge of Mexican peso (Ps)47.0bn ($2.3bn), versus a benefit of Ps36.2bn reported in Q3 2020, Pemex said. The company also paid more taxes, which deepened its losses. The following shows the company's Q3 financial performance. Figures are in millions of pesos.

Third-quarter gross income rose because sales grew faster than costs. Sales rose because of higher production volumes and higher sales prices, Pemex said. The following table shows the company's Q3 production statistics.

Pemex attributed the increase in oil production to new fields and to incremental increases at existing fields. Pemex expects these new fields will help increase oil production to 1.95m bbl/day in 2022, up from a forecast of 1.77m bbl/day in 2021.

Crude production is important to Mexico's petrochemical industry because much of the nation's domestic ethane is derived from the associated gas produced by the country's oil wells. All of Mexico's crackers use ethane as a feedstock.

Despite the rise in oil production, Q3 output of natural gas liquids (NGLs) fell because of a decline in natural-gas processing. That fell because of a decline in wet gas production, Pemex said.

Production of methane derivatives rose because of the restart of the ammonia VI plant, Pemex said. Production of aromatics rose because of better performance of the catalytic reformer at the Cangrejera petrochemical production, Pemex said.

Ethane derivatives fell because of problems in auxiliary services at the Morelos and Cangrejera petrochemical complexes, Pemex said. Maintenance work is being carried out to bring the affected units back into operation.

Crude oil processing reached an average of 695,000 bbl/day during the third quarter, up from 605,000 bbl/day from Q3 2020, Pemex said. Utilisation rates were 42.4%, up from 36.9%, Pemex said. Pemex attributed the increase to better performance at its Salina Cruz, Tula and Cadereyta refineries.

As MRC informed before, Pemex Petroquimica, a subsidiary of the Mexican state oil company Pemex, has resumed production of high-density polyethylene (LDPE) on line 2 in Cangrejera, Mexico after an unscheduled renovation. Earlier it was noted that Pemex postponed the restart of the second line with a capacity of 200,000 tonnes per year for the production of LDPE until August 10. It was originally planned that the launch of this production will begin at the end of July. The line was closed on 10 July.

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.

Petroleos Mexicanos (Pemex) is a Mexican state-owned oil and gas and petrochemical company. Since the nationalization of the Mexican oil industry in 1938, Pemex has remained a state-owned company and, by law, has exclusive rights to explore and produce oil in the country. Almost 60% of the company's revenues go to the state budget. Petrochemical products include, but are not limited to, polyethylene, polyvinyl chloride.
MRC

COVID-19 - News digest as of 29.10.2021

1. TotalEnergies posts sharp rise in earnings and higher output in Q3 2021

MOSCOW (MRC) -- France's TotalEnergies reported higher production and a sharp jump in earnings in the third quarter of 2021, predicting that surging oil and gas prices and rebounding demand will lift its performance into early 2022, reported S&P Global. Given the outlook for higher OPEC+ production quotas and seasonal gas demand in the fourth quarter, TotalEnergies said Oct. 28 it expects fourth-quarter 2021 hydrocarbon production to be in the range of 2.85 million-2.9 million b/d of oil equivalent, up from Q3 levels. After gas prices hit record levels in Europe and Asia during the quarter, TotalEnergies said, "barring an exceptionally mild winter, the low inventory level for gas and expected sustained demand are likely to keep gas prices in Europe and Asia at high levels until the second quarter 2022."

MRC