EIA predicts crude oil prices to go down in November and through 2022

MOSCOW (MRC) -- The EIA forecasts that crude oil prices will begin declining in November 2021 and will decline through 2022, according to Hydrocarbonprocessing.

We expect that the price of WTI will fall from an average of USD76/b in January 2022 to USD62/b in December and that the price of Brent will fall from USD79/b in January 2022 to USD66/b in December, said EIA.

Since the third quarter in 2020, global demand for crude oil and petroleum products has increased faster than production, which has led to inventory draws and increasing crude oil prices.

In February 2020, before the World Health Organization declared COVID-19 a pandemic, the spot price for Brent crude oil averaged USD56 per barrel and USD51/b for West Texas Intermediate (WTI). The spot prices for Brent fell to USD18/b and WTI to USD17/b in April 2020 because of the significant decline in demand caused by the pandemic.

Prices have since increased and are now above pre-pandemic levels because of returning demand and slow global oil production growth. In October, the price of Brent crude oil averaged USD84/b, and the price of WTI averaged USD81/b, the highest nominal prices since October 2014. In the EIA's November Short-Term Energy Outlook (STEO), they forecast that global liquid fuels inventories will begin building in 2022, driven by rising production from OPEC+ and the United States, which will contribute to falling crude oil prices.

The futures markets are similarly showing high prices in the near term compared with longer-dated contracts. Crude oil stock levels, among other factors, affect the relationship between near-term and longer-term futures prices.

Differences in prices between crude oil contracts for delivery in the near term compared with contracts for delivery at later dates indicate market expectations that stock draws will moderate. Low crude oil inventories, both globally and in the United States, have put upward price pressure on near-dated contracts, whereas longer-dated contract prices likely reflect expectations of a more balanced market. Because of the upward price pressure on the near-term contracts, near-dated contracts have higher prices than longer-dated contracts, a situation referred to as backwardation. When near dated contracts have lower prices than longer-dated contracts, it is known as contango.

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) -- The American Petroleum Institute (API) updated its Compendium of GHG Emissions Methodologies for the Natural Gas and Oil Industry, said Hydrocarbonprocessing.

This is the foundational reference used by companies and governments across the world as methodologies for reporting GHG emissions from natural gas and oil operations, including for API’s climate-related reporting template released earlier this year.

The fourth edition of the compendium includes expanded methodologies for LNG, as well as carbon capture, use and storage.

"As COP26 discussions continue, America’s natural gas and oil industry remains focused on driving progress on climate solutions, including enhanced GHG emissions reporting, while meeting the world’s growing energy demand,” API Vice President of Corporate Policy Stephen Comstock said. “Many companies have reported on GHG indicators for over 20 years, and we are committed to continuous improvement, including this comprehensive update of methodologies in the API compendium. The updated compendium was developed in consultation with our members and stakeholders around the world and reflects the industry’s leadership on sustainability issues and efforts to drive consistency and transparency in climate reporting."

As per MRC, BP said it will remain a member of the American Petroleum Institute (API) after the largest U.S. oil and gas trade lobby group addressed some differences with the British energy company over climate change. BP, which plans to sharply cut its oil output and boost its renewable energy capacity over the next decade, said in a report that despite "uneven progress", the API was "heading in the right direction". The API has faced growing pressure from member companies and activist groups to change its policies relating to climate change and drilling regulations.

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) -- Following the announcement on November 10, 2021 regarding a possible block sale of shares in Aker BP, bp and Aker confirmed on 12 November that they successfully sold 18,010,000 Aker BP shares, representing a combined approximate 5% of shares in the company, at a price of NOK 310 a share, according to Hydrocarbonprocessing.

bp sold 7,718,571 shares, representing an approximate 2.1% stake in Aker BP, for a total of NOK 2.39 B.

Following the sale, bp now holds an approximate 27.85% interest in Aker BP, Aker 37.14% and the free float of the company has increased to 35%. bp and Aker have entered into a 6-mos lock-up for their remaining shares in Aker BP, subject to certain exemptions.

J.P. Morgan and Pareto Securities acted as Joint Global Coordinators, and Joint Bookrunners with DNB Markets, a part of DNB Bank ASA, Goldman Sachs International and Morgan Stanley & Co. International plc in the sale. Advokatfirmaet BAHR AS acted as Norwegian legal advisers.

As MRC wrote previously, in October, 2021, BP announced plans for a USD269 million investment in three projects at its Cherry Point Refinery in Washington state, aimed at improving the refinery’s efficiency, reducing its carbon dioxide (CO2) emissions and increasing its renewable diesel production capability. The investment is aligned with bp’s aims to be net zero across its operations by 2050 or sooner and to reduce the carbon intensity of the products it sells by 50% by 2050 or sooner.

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.

BP is one of the world's largest oil and gas companies, serving millions of customers every day in around 80 countries, and employing around 85,000 people. BP’s business segments are Upstream (oil and gas exploration & production), and Downstream (refining & marketing). Through these activities, BP provides fuel for transportation; energy for heat and light; services for motorists; and petrochemicals products for plastics, textiles and food packaging. It has strong positions in many of the world's hydrocarbon basins and strong market positions in key economies.
MRC

MOSCOW (MRC) -- Fire has broken out at a fuel storage unit at Pertamina's refinery complex in Cilacap, central Java, the Indonesian energy company said on Saturday, adding residents close to the scene would be evacuated, said Reuters.

Pertamina is making efforts to extinguish the blaze and prevent it from spreading, it said, while ensuring the safety of people in the area.

The fire started at around 19.20 local time (1220 GMT) and the cause is not yet known, Pertamina said. Mobile phone videos broadcast on local media showed a large blaze, casting the evening sky orange.

"Extinguishing efforts are being carried out intensively on the burning tank, while the surrounding tanks are being cooled with water sprinklers to prevent the fire from spreading," Pertamina said in a statement. "For people located in the area closest to the location, an evacuation will be carried out to move the community to a safer place," it added.

Pertamina spokesperson Heppy Wulansari said the fire had only affected the storage unit and the company was monitoring the situation before deciding whether it might be necessary to shut the refinery. Cilacap refinery is one of Pertamina's biggest refining facilities, with a capacity of 348,000 bpd.

As per MRC, PT Pertamina is in plans to resume operations at its sole polypropylene (PP) plant in Plaju, South Sumatera this week after a scheduled maintenance. The outage at the company's 47,000 mt/year of PP plant began on 16 September and was to last for about 17 days. Thus, this plant was initially scheduled to resume operations on 3 October, 2021.

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.

Pertamina is an Indonesian state-owned oil and natural gas corporation based in Jakarta. It was created in August 1968 by the merger of Pertamin (established 1961) and Permina (established 1957). Pertamina is the world's largest producer and exporter of liquefied natural gas (LNG).
MRC

MOSCOW (MRC) -- India's fuel demand rose in October to a seven-month peak, with gasoline sales surging to an all-time high, government data showed on Tuesday, as festivals boosted mobility and economic activity in the world's third biggest oil consumer, said Hydrocarbonprocessing.

Fuel consumption, a proxy for oil demand, rose over 12% to 17.87 MM tons last month from September. It was up 0.8% from the corresponding period last yer and 3% from October 2019, data from the Petroleum Planning and Analysis Cell (PPAC) showed. Consumption got a boost from the start of the festival season in October, offsetting the impact of high prices, Refinitiv analyst Ehsan Ul-Haq said.

October's sales of gasoline, or petrol, were 8.3% and 3.4% higher than in 2019 and 2020 respectively and at 2.75 MM tons, was the highest-ever monthly figure recorded as per data going back to 1998. Improving vaccination coverage and the opening up of schools, colleges and offices helped demand, said Prashant Vasisht, vice president and co-head, corporate ratings at ICRA.

Diesel sales, which typically rise ahead of the Diwali festival, rose nearly 20% from September to 6.61 MM tons, helped along by the quickest monthly expansion in the country's factory activity in eight mos. Consumption of diesel, which accounts for about 40% of India's refined fuel sales, was also up 1.5% from October 2020, but down 5.6% year-on-year.

India, Asia's third-largest economy, reduced excise duty on petrol by 5 rupees ($0.0674) per liter, and that on diesel by 10 rupees (USD0.1348) per liter, last week. The lower prices and an uptick in economic activity should also aid diesel demand, ICRA's Vasisht added. Compared to last yr, sales of cooking gas, or liquefied petroleum gas (LPG), increased nearly 3% to 2.49 MM tons, while naphtha sales fell 5.2% to 1.28 MM tons.

As per MRC, Indian state refiners' gasoline and gasoil sales rose in June compared with a month earlier, preliminary industry data showed on Thursday, as states across the country eased coronavirus-related restrictions as cases fell. Gasoline sales by state refiners rose 29.4%, while diesel sales were up 18.5% in June compared with May, the data showed. Sales had declined by about a fifth in May from a month earlier due to lockdowns across the country.

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