MOSCOW (MRC) - Crude oil edged lower on Thursday, posting slim losses after several days of strength that pushed benchmarks to seven-year highs due to concerns about tight supply, reported Reuters.
Brent crude futures settled down 6 cents to USD88.38 a barrel. The global benchmark rose to USD89.17 on Wednesday, its highest level since October 2014; the benchmark is up 13% on the year so far.
US West Texas Intermediate (WTI) crude futures for February delivery lost 6 cents to USD86.90 a barrelon the last day of the contract's life. WTI is up 15% so far this year. The more active March WTI contract settled at USD85.55 a barrel, down 25 cents.
Crude stocks rose by 515,000 barrels last week while gasoline inventories rose by 5.9 million barrels, boosting those inventories to their highest in a year, according to the US Energy Department.
"I don't think the build in gasoline supplies is a bull killer. We're going to need refiners to continue to refine to meet gasoline demand in the summer driving seasons - that is one of the reasons the market is still supported despite the build in gasoline supplies," said Phil Flynn, senior analyst at Price Futures Group.
Trading has been dominated by supply concerns, from short-term issues like a temporary halt to flows in an Iraq-to-Turkey pipeline to a consistent shortfall from OPEC+ members in reaching targeted supply increases.
In the meantime, demand remains steady, with U.S. product supplies, a proxy for demand in the world's largest consumer, reaching 21.2 million bpd over the past four weeks, ahead of the pre-pandemic pace.
Supply concerns have mounted this week after a fire temporarily halted flows through an oil pipeline running from Iraq's Kirkuk to the Turkish port of Ceyhan on Tuesday.
The OPEC+ producer group comprising OPEC and allies led by Russia has been producing less than its targets, with the International Energy Agency (IEA) on Wednesday estimating that the group produced about 800,000 barrels per day (bpd) below its December targets.
The IEA said that while the oil market could be in a significant surplus in the first quarter of this year, inventories are likely to be well below pre-pandemic levels. The agency also upgraded its 2022 demand forecast.
As MRC informed earlier, global oil refining capacity fell for the first time in 30 years last year, as new capacity was outweighed by closures, said the International Energy Agency's (IEA) in its monthly oil market report on Wednesday. Refining capacity was down by 730,000 bpd in 2021, the IEA said, but net additions were expected to amount to 1.2 MMbpd in 2022.
We remind that China's refinery output hit a fresh high in 2021, up 4.3% from a year earlier on robust fuel demand especially in the first half of the year, and as refiners ramped up processing to fill a supply gap after a hefty new tax closed loopholes in blending fuel imports. Total refinery throughput last year reached 703.55 MM tons, or 14.07 MMbpd, data from the National Bureau of Statistics showed on Monday, roughly 620,000 bpd above the 2020 level.
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 2,265,290 tonnes in the first eleven months of 2021, up by 14% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,363,850 tonnes in January-November, 2021, up by 25% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding PP random copolymers decreased significantly.
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