Oil prices rise on unexpected US crude stocks decline

MOSCOW (MRC) -- Oil prices rose on Wednesday, extending strong gains in the previous session, after industry data showed US crude stocks unexpectedly fell last week just as near term travel demand picked up with pandemic curbs easing, reported Reuters.

US West Texas Intermediate (WTI) crude futures rose 23 cents, or 0.3%, to USD84.38 a bbl at 0132 GMT, adding to a 2.7% gain on Tuesday.

Brent crude futures jumped 36 cents, or 0.4%, to USD85.14 a bbl, after rising 1.6% on Tuesday.

Tightening global oil inventories have supported strong crude prices during the past several mos, and the latest data from the American Petroleum Institute reinforced the view that supply remains constrained.

According to market sources, API data showed US crude stocks declined by 2.5 MM bbl for the week to Nov. 5, defying analysts' estimates for a 2.1 MM build in crude stocks in a Reuters poll.

Further underpinning the view the market remains tight, trading giant Vitol Group's CEO Russell Hardy said on Tuesday that oil demand had returned to pre-pandemic levels and that the first quarter of 2022 could see demand exceed 2019 levels.

"The possibility of a spike to USD100 per bbl is clearly there," Hardy told the Reuters Commodities Summit.

Market gains on Tuesday were mainly driven by a short-term outlook from the EIA, which projected gasoline prices would fall over the next few mos.

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, EIA said in a monthly report earlier this year, a smaller decline than its previous forecast for a drop of 210,000 bpd.
MRC

MOSCOW (MRC) -- Shenhua Ningxia Сoal Industry (SNCG), a subsidiary of Shenhua Group, has shut down its two polypropylene (PP) lines in Ningxia province, China for an uscheduled maintenance, according to CommoPlast with reference to market sources.

Thus, the company took off-stream its No. 1 and No. 2 lines with the combined capacity of 500,000 mt/year of PP (250,000 mt/year each) on 4 November, 2021. Both of the units would remain shut indefinitely.

SNCG declined to comment on the causes of the unexpected shutdown. However, sources attributed the weak economic production to the decision.

Other production lines, including the No. 3 and No. 4 unit at the same complex also with a combined capacity of 500,000 mtyear, are unaffected by the shutdown.

In addition, the company’s phase II PP unit with nameplate output of 600,000 tons/year remains operating as usual.

As MRC reported previously, SNCG shut its No. 1 and 2 PP lines for a scheduled turnaround from 28 May, 2021, to 26 June, 2021.

According to MRC's ScanPlast report, 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.

Shenhua Ningxia Coal Industry Group Co., Ltd. engages in coal mining and washing, coal deep processing, coal chemical industry, electric power, real estate, and other businesses.
MRC

MOSCOW (MRC) -- Australia will set up a AD1 B (USD740 MM) fund to invest in companies to develop low-emissions technology, Prime Minister Scott Morrison said on Wednesday, as the country seeks to cut carbon emissions and hit net-zero targets by 2050, reported Reuters.

Under the plan, the federal government will commit AD500 MM to the fund, matched by private investors, which will be used to back early stage companies in developing technologies including carbon capture and storage (CCS).

"Our plan to reach net zero by 2050 is an Australian one that's focused on technology not taxes and this fund backs Australian companies to find new solutions," Morrison said in a statement.

The federal government will introduce legislation to establish the fund, in order to allow the Clean Energy Finance Corp to fund CCS, which is not allowed under its existing terms.

The move came a day after the federal government pledged AD178 MM (USD132 MM) to ramp up the rollout of hydrogen refueling and charging stations for electric vehicles.

As MRC wrote before, in March 2021, BP plc stopped importing oil for its refinery in Western Australia, the country’s largest, and was on track to decommission the plant by the end of March. BP announced last October it would shut the loss-making Kwinana plant, capable of processing 146,000 barrels per day (bpd) of oil, and turn it into a fuel import terminal. It said at the time operations would wind down over six months.

We remind that in early February, 2021, Rosneft Oil Company and BP signed a Strategic Collaboration Agreement focused on supporting carbon management and sustainability activities of both companies. The agreement builds on years of partnership between the two companies and formalises key elements of their collaboration on sustainability and work to identify carbon reduction activities and low carbon opportunities.

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

MOSCOW (MRC) -- Crude oil futures were lower in mid-morning trade in Europe on Nov. 10, as the latest EIA Short Term Energy Outlook projects oil markets to be oversupplied in early 2022, reported S&P Global.

The EIA is set to release its latest US crude inventory data on Nov. 11 with the market watching closely whether it will confirm the inventory draw reported by the API on Nov. 9.

At 11:20 am London time (11:20 GMT), the January ICE Brent futures contract was down 7 cents/b at USD84.71/b from the previous close, while January NYMEX WTI futures were down 26 cents/b at USD82.32/b.

Crude prices stagnated midmorning in Europe after ticking up in midafternoon trade in Asia, following a report from the American Petroleum Institute that showed a larger than expected fall in US crude inventories. This caps a week-long rally, which saw Platts Dated Brent prices rise USD2.68/b in the past five days.

According to latest data from the American Petroleum Institute, or API, US crude inventories fell by 2.5 million barrels for the week ending Nov. 5 compared with a build of 3.6 million barrels reported by the API for the previous week. The forecasted consensus for the week ending Nov. 5 was an increase of 1.9 million barrels, exacerbating concerns about low crude inventory levels in the US over the past weeks.

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

The focus for the rest of the week will shift to inventory data reported by the US Energy Information Administration as well as key inflation readings to be released later in the day by the US Labor department. The weekly inventory data from the EIA, is due to release on late Nov. 11 with market watchers awaiting to confirm on the drawdown in crude stocks.

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, EIA said in a monthly report earlier this year, a smaller decline than its previous forecast for a drop of 210,000 bpd.
MRC

MOSCOW (MRC) -- Deployment of carbon capture storage (CCS) in Indonesia by American energy giant Exxon Mobil Corp could cost about USD500 mln, said Hydrocarbonprocessing.

Pertamina and ExxonMobil signed a MoU during the COP26 summit last week to look at ways of using CCS in Southeast Asia's largest country. "Our provisional estimate for investment needs is around $500 MM, excluding operating costs that will be incurred during CCS operations," Daniel Purba, Pertamina's senior vice president of corporate strategy, told CNBC Indonesia.

CCS facilities are likely to be implemented in two Indonesia oil and gas fields, namely the Gundih field in Cepu and the Sukowati field in Bojonegoro, in Central and East Java respectively, Purba said. A spokesperson for Exxonmobil did not immediately respond to a request for comment.

Pertamina and ExxonMobil would need to build a 4 km (2.49 miles) gas pipeline from Gundih to a reservoir where they would inject the carbon, and another 30 km gas pipline from Sukowati, Purba added. CCS traps emissions and buries them underground but is not yet at the commercialization stage.

CCS advocates see the technology as essential to help meet net zero emissions and key to unlocking large-scale economic hydrogen production. Critics, however, say CCS will extend the life of dirty fossil fuels. Indonesia, the world's eighth-biggest carbon emitter, has brought forward its goal for net zero emissions to 2060 or sooner.

As per MRC, ExxonMobil plans to build its first, large-scale plastic waste advanced recycling facility in Baytown, Texas, and is expected to start operations by year-end 2022. By recycling plastic waste back into raw materials that can be used to make plastic and other valuable products, the technology could help address the challenge of plastic waste in the environment. A smaller, temporary facility, is already operational and producing commercial volumes of certified circular polymers that will be marketed by the end of this year to meet growing demand.

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.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world"s oil and about 2% of the world"s energy.
MRC