Crude oil futures continue upward trend in Asia as US EIA report forecast supply to exceed demand next year

Crude oil futures continue upward trend in Asia as US EIA report forecast supply to exceed demand next year

MOSCOW (MRC) -- Crude oil futures were higher in midmorning trade in Asia Nov. 10, on track for a fourth straight day of gains, as a US Energy Information Administration report forecast supply to exceed demand next year and eased concerns about a possible Strategic Petroleum Reserve release, reported S&P Global.

At 10:49 am Singapore time (0249 GMT), the ICE January Brent futures contract was up 38 cents/b (0.45%) from the previous close at USD85.16/b while the NYMEX December light sweet crude contract rose 14 cents/b (0.17%) at USD84.29/b.

The EIA in its latest Short-Term Energy Outlook said growth in output from OPEC+ members, US shale and other non-OPEC countries will outpace slowing growth in global oil consumption in 2022. It forecast Brent prices easing from current levels to an average of USD72/b for the year.

For the remainder of 2021, it expects Brent prices to remain near current levels, averaging USD82/b in the fourth quarter.

The EIA trimmed the outlook for 2022 global oil demand growth by 130,000 b/d from last month to 3.35 million b/d, but raised its outlook for US oil production to 11.13 million b/d in 2021, up 110,000 b/d from last month's outlook, and to 11.9 million b/d in 2022, up 170,000 b/d.

The report has eased concerns that the Biden administration will tap its SPR to curb what it sees as an excessive run-up in oil prices, analysts said. President Joe Biden has been vocal in calling on OPEC to raise output beyond their quota levels, and senior officials of the administration have hinted in recent days that Biden might take action in the week started Nov. 7.

Oil prices have added 4.2%-5.3% in value since a brief correction mid last week and were now on track to surpass seven-year peaks touched in late-October. Investors have been quick to buy any dip as the narrative of a tight supply market continued to dominate the sentiment.

Media reports said that American Petroleum Institute data showed a draw in US crude oil inventories in the week ended Nov. 5. If confirmed by the EIA's weekly inventory numbers out later Nov. 10, this would mark the second weekly drop in crude oil inventories in seven weeks.

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.
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Fujian Gulei Petrochemical starts up new MEG/EO plant in China

Fujian Gulei Petrochemical starts up new MEG/EO plant in China

MOSCOW (MRC) -- Scientific Design Company, Inc. (SD) has announced the successful commissioning and start-up of the Fujian Gulei Petrochemical Co., Ltd. EO/EG plant located in Zhangzhou, Fujian, China licensed by SD with a capacity of 700 KTA monoethylene Glycol (MEG) and 100 kta purified ethylene oxide, according to Hydrocarbonprocessing.

The plant was able to achieve capacity and produce high quality products within a few days of feed introduction.

Along with the use of SD’s process technology, the plant is operating with SD’s SynDox ethylene oxide catalyst.

The plant is part of a 50:50 joint venture between Sinopec’s Fujian Petrochemical Company Ltd and Taiwan Xuteng Investment Company Ltd and Gulei is one of the seven major petrochemical industry bases in China.

As MRC wrote before, the trial runs at Fujian Gulei's new MEG plant with the capacity of 700,000 mt/year began on 7 August, 2021, and Gulei Refining & Chemical was then in the proces of ramping up its production capacity.

We remind that Fujian Gulei Petrochemical received commercial production at its new steam cracker in Zhangzhou (Zhangzhou, Fujian Province, China) on August 18, 2021. And before that, the company supplied naphtha to this cracker with a capacity of 800,000 mt/year of ethylene on August 17, thereby starting test production there.

MEG is one of the main feedstocks for the production of polyethylene terephthalate (PET).

According to MRC's ScanPlast report, the estimated PET consumption in Russia increased to 56,960 tonnes in September 2021, up by 10% year on year. Russia's overall PET consumption reached 592,560 tonnes in the first nine months of 2021, up by 12% year on year.

SD has licensed over 100 ethylene oxide/MEG plants in 25 countries around the world.

Fujian Gulei Petrochemical Co. Ltd. headquartered in Xiamen (Xiamen, China) was established in November 2016. The company is a 50:50 joint venture between China's Fujian Petrochemical Company Limited (FPCL, part of Sinopec) and Taiwan's Taiwan Xuteng Investment Company Limited. It was established for the construction of an integrated petrochemical complex in Zhangzhou, Fujian province, southeastern China.
MRC

PetroChina expects tight global natural gas supply to ease next year as higher production is forecast to outpace demand

PetroChina expects tight global natural gas supply to ease next year as higher production is forecast to outpace demand

MOSCOW (MRC) -- The tight supply situation of natural gas in the global markets is expected to ease to a certain extent in 2022 as production growth is forecast to outpace demand, reported S&P Global with reference to a a statement of Luo Yizhou, vice president of PetroChina International Co. Ltd, a subsidiary of state-owned PetroChina.

"With the normalization of COVID-19 pandemic prevention and control measures, the continuous recovery of the world economy, and the stabilization of international oil prices, global natural gas demand is estimated to grow to around 4.070 trillion cu m in 2022, up 2.3% year on year," Luo said at the 10th China International Oil and Gas Trade Congress in Shanghai Nov. 8.

"On the other hand, global natural gas production is expected to be 4.12 trillion cu m in 2022, up 4% year on year," he said, expecting the tight gas supply to ease based on that scenario.

The tight supply has pushed up global gas prices in 2021, with the benchmark JKM, TTF and NBP all rising to historical highs in the September-October period.

"Supply has not been able to keep up with the rebound in demand post pandemic," said Chris Midgley, global head of analytics with S&P Global Platts, at the conference. This was the main reason that caused the tight natural gas supply situation this year, Midgley said.

Global demand for natural gas is expected to grow steadily in the next few decades due to accelerated actions against climate change.

"About 50% of the incremental global natural gas demand will come from Asia by 2035, with China and India as the main engines to boost the development of the LNG market," Luo said.

"Natural gas will play a very important role in the energy transition. We expect the global natural gas demand to grow to around 6.1 trillion cu m in 2050 while China's natural gas consumption will be around 670 billion cu m in the same year," he said, and adding that China's natural gas demand is expected to peak in 2040.

PetroChina targets reaching peak carbon by 2025, and the company is scheduled to have a changeover to renewable energy by 2035 and a near-zero emissions and green transformation by 2050, according to Luo.

China's peak carbon and carbon-neutrality targets of 2030 and 2060, respectively, have promoted the development of new trading categories, such as carbon emissions trading. PetroChina will monitor the progress of domestic carbon futures, and participate in their trading to help its subsidiaries lower the cost of compliance, Luo added.

As MRC informed previously, PetroChina, Asia's largest oil and gas producer,aims to have oil, gas and green energies to each account for a third of its portfolio by 2035, as the Chinese oil major shifts toward a lower-carbon future.

We remind that in August, 2021, PetroChina Liaoyang Petrochemical Co Ltd , part of the Chinese petrochemical major - PetroChina,successfully started up its new polypropylene (PP) plant last week. Based in Liaoning City, Liaoyang Province, China, the new PP plant has a production capacity of 300,000 tons/year.

According to MRC's ScanPlast report, PP shipments to the Russian market were 1,138,510 tonnes in the first nine months of 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding PP random copolymers decreased significantly.

PetroChina Company Limited, is a Chinese oil and gas company and is the listed arm of state-owned China National Petroleum Corporation, headquartered in Dongcheng District, Beijing. It is China's biggest oil producer.
MRC

Phillips 66 plans to convert Alliance refinery to terminal facility

Phillips 66 plans to convert Alliance refinery to terminal facility

MOSCOW (MRC) -- Phillips 66, a diversified energy manufacturing and logistics company, has announced it plans to convert its Alliance Refinery in Belle Chasse, La., to a terminal facility, reported Reuters.

The conversion is expected to take place in 2022.

“We made this decision after exploring several options and considering the investment needed to repair the refinery following Hurricane Ida,” said Greg Garland, Chairman and CEO of Phillips 66. “Alliance’s existing infrastructure and Gulf Coast location make it an attractive midstream asset. Phillips 66 will continue to be a major refiner with 12 facilities in the US and Europe.”

The Alliance Refinery employs approximately 500 employees and 400 contractors.

“Our decision was a difficult one, and we understand it has a profound impact on our employees, contractors and the broader Belle Chasse community,” Garland said. “We will work to help them through this transition and support them as Alliance takes on a new role in our portfolio.”

As MRC informed earlier, US Refiner Phillips 66 said on 30 September it would cut greenhouse gas emissions by 30% from its operations by 2030, amid mounting pressure on the industry to join the fight against climate change and cut carbon emissions by mid-century.

We remind that US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

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 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.

Phillips 66 is a diversified energy manufacturing and logistics company. With a portfolio of Midstream, Chemicals, Refining, and Marketing and Specialties businesses, the company processes, transports, stores and markets fuels and products globally. Headquartered in Houston, the company has 14,100 employees committed to safety and operating excellence. Phillips 66 had USD56 billion of assets as of Sept. 30, 2021.
MRC

Canadian oil sands are gradually approaching record production

Canadian oil sands are gradually approaching record production

MOSCOW (MRC) -- Canada's oil sands are inching toward record production, as the country's biggest producers squeeze more bbl out of existing assets, but they are holding back on big spending despite some of the highest oil prices in seven yr., said Reuters.

The oil sands, which make up the bulk of Canada's production, are on track to reach 3.5 MM barrels per day (bpd) by year-end, surpassing January's record of 3.25 MMbpd, said Matt Murphy, analyst at investment bank Tudor, Pickering, Holt.

Oil demand is rebounding as expanding COVID-19 vaccination rates spur greater economic activity, and as the OPEC+ group of major producers ignores U.S. calls to raise supply faster. Those factors have driven global prices to more than USD80 per bbl. Canada's majors all signaled recently, however, that they have no plans to take on big new projects or significant expansions to existing facilities.

Canadian Natural Resources Ltd (CNRL), Suncor Energy Inc and Cenovus Energy Inc elected instead to increase dividends to take advantage of stronger revenues. Those producers are scheduled to unveil 2022 capital budgets in coming weeks, but will prioritize small expansions and efficiencies to their sites to raise output.

Total Canadian production, including conventional crude oil and condensate, hit a record of 4.96 MMbpd in December 2019, according to the Canada Energy Regulator. Canada produced 4.67 MMbpd in August 2021, the most recent data available. Cenovus plans to raise production through small expansions and reducing bottlenecks to assets it acquired this yr, rather than big projects, Chief Executive Alex Pourbaix said.

"These projects have way lower capital, they have very high returns and we can bring them into service in very short order," Pourbaix said in an interview. "They're actually much more compelling economically than looking at the large-scale, phased expansions that cost several billion dollars and take five to six years to construct." Imperial Oil Ltd, majority-owned by Exxon Mobil Corp, has a number of projects planned for its Kearl oil sands plant that will increase production to 280,000 bpd by 2025 from 265,000 bpd this yr, CEO Brad Corson said.

CNRL President Tim McKay said the company is focusing on efforts like introducing solvents to boost production at thermal oil sands operations and reduce emissions from natural gas. "Given what we have been through with all the volatility with oil and gas prices, it's very difficult to go out and sanction major expenditure," McKay said.

As per MRC, Canadian Natural Resources Ltd. said Aug. 31 it will acquire full ownership in the Joslyn oil sands lease from the project’s partners for roughly CD225 million. The price tag consists of CD100 million cash at closing plus annual cash payments of CD25 million over each of the next five years. The sellers consist of several partners led by operator Total SA.

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 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.
MRC