MOSCOW (MRC) -- Crude oil futures extended declines in midmorning trade in Asia Nov. 15, as investors continued to fret over a stronger dollar amid signs of rising inflation and a recent uptick in COVID-19 cases in Europe and China, reported S&P Global.
At 10:12 am Singapore time (0212 GMT), the ICE January Brent futures contract was down 49 cents/b (0.60%) from the previous close at USD81.68/b, while the NYMEX December light sweet crude contract fell 39 cents/b (0.48%) to USD80.40/b.
Bearish pressures continued to dominate sentiment in an event-thinned week of Nov. 14, with investor confidence shaken in recent days by signs of rising inflation in the US. The Biden Administration has hinted at action to tackle surging energy prices in the form of Strategic Petroleum Reserve releases.
"The White House has been debating how to tackle higher inflation, with some officials calling for the strategic reserve to be tapped, or halting US exports," said ANZ Research analysts Brian Martin & Daniel Hynes in a note.
The latest inflation prints could also bring forward the US Federal Reserve's plans to tighten its easy monetary policy further with earlier rate hikes. A majority of traders were now pricing in a rate hike as early as June 2022, compared to earlier expectations of a hike in November 2022, according to the CME FedWatch Tool.
The US dollar has strengthened as a result, with the US dollar index notched near highs not seen since July 2020. As of 0212 GMT, the index was down 0.15% at 94.99.
Meanwhile, the recovery in global mobility has stalled amid an uptick in COVID-19 cases worldwide. China continues to battle its latest outbreak of cases, while several European countries including Germany, Austria and the Netherlands have registered record caseloads in recent days.
Global mobility in the week to Nov. 8 averaged 9.8% below pre-COVID levels in most of the world's top oil users excluding China, according to the latest Google data, up from 8% a week earlier.
IG market strategist Yeap Jun Rong said the outlook for oil prices will remain clouded in the near-term, while not ruling out further declines in the days ahead.
As MRC wrote previously, the average utilisation rate at China's four state-owned refiners fell to a five-month low of 80.6% in October from 81.5% in September while independent refiners also maintained run rates at low levels due to feedstock shortage. These would likely lead the country's crude throughputs to extend the downward trend in October from the 17-month low of 13.7 million b/d, or 56.07 million mt, in September, according to data from the National Bureau of Statistics.
The four state oil companies -- Sinopec, PetroChina, CNOOC and Sinochem - plan to process a total 7.67 million b/d of crudes in October, against their nameplate capacity of 9.52 million b/d, Platts data showed. This compared with a planned throughput of 7.7 million b/d in September. In November, the state-run refiners plan to lift throughput from the low base in October to boost gasoil and gasoline supplies for meeting domestic demand, refining sources 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 1,868,160 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.
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