Oil prices nearly flat as market weighs Chinese demand, North America supply increase

Oil prices were little changed as markets weighed new economic data from China against increasing supply from the Western Hemisphere, said Hydrocarbonprocessing.

Brent crude futures LCOc1 settled flat at USD82.96 a barrel. U.S. West Texas Intermediate crude futures CLc1 ended 20 cents lower at USD78.93. China's import and export growth beat estimates, suggesting global trade is turning a corner in a positive signal for policymakers as they try to shore up economic recovery.

But even as China posted a 5.1% rise in crude imports during the first to months of the year from a year earlier, overall imports have been falling, continuing a trend of softening purchases by the world's biggest buyer.
"The import numbers were down substantially because they are not willing to pay full price for barrels," said Bob Yawger, director of energy futures at Mizuho. The lack of Chinese demand failed to impress the market, he said.

The global oil market is relatively well supplied with demand growth slowing and supply increasing from the Americas, the head of the International Energy Agency's (IEA) oil markets and industry division told Reuters on Thursday. Oil inventories in the U.S. rose last week for a sixth week in a row.

"The market continues to be pulled around demand concerns in China, on the one hand, and increasing supply out of the Western Hemisphere," said Andrew Lipow, president of Lipow Oil Associates.

The markets were bracing for the likelihood that the Federal Reserve could delay its first U.S. interest rate cut to the second half of this year, which boosted the dollar, according to a Reuters poll of foreign exchange strategists. A strong greenback dents demand for dollar-denominated oil among buyers using other currencies.

On Wednesday, Fed Chair Jerome Powell said the central bank still expects to reduce its benchmark interest rate this year. On Thursday, the European Central Bank kept its main interest rate unchanged at 4.0% as expected.

Fuel consumption in India, the world's third-biggest oil importer and consumer, rose 5.7% year-on-year in February, aided by strong factory activity.

We remind, crude oil processing, or refinery runs, in China averaged 14.8 MM bpd in 2023, an all-time high. The record processing came as the economy and refinery capacity grew in China following the country’s COVID-19 pandemic responses in 2022. China has increased refinery capacity more than any other country in recent years, partially to meet the country’s transportation fuel needs but also to produce feedstocks for its petrochemical industry.

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Spain's second-largest oil company Cepsa closed 2023 with a 233 million euro (USD254.74 million) loss after posting another quarterly loss for the last three months of the year, as it did in the first and second quarter, said Reuters.

The results reflect a mix of factors, some affecting the broader market while others linked to the company's strategy and the regulatory framework in Spain. Like other oil companies, Cepsa was hit by lower oil and gas prices, while inflation curbed demand for products of its chemicals unit.

In 2022, the company posted a 1.1 billion euro profit on the back of soaring oil and gas prices following Russia's invasion of Ukraine.

Spain's windfall tax on large energy companies' domestic sales wiped out its first-quarter profit. Since the company does most of its business in Spain, the tax has a higher relative impact on its bottom line compared with companies with large international operations. Cepsa paid 323 million euros last year.

The company also paid the price of its green shift, with earnings from its upstream division falling sharply after the sale of its upstream assets in Abu Dhabi.

Owned by Abu Dhabi fund Mubadala and the Carlyle Group , Cepsa is investing up to 8 billion euros to shift to low carbon energy, and the Abu Dhabi sale is part of this plan.

"Our financial results over the year reflect the strategic repositioning of our global portfolio towards more sustainable areas ... ," Chief Executive Maarten Wetselaar said.

Wetselaar struck an upbeat tone for the future, including its ambitious hydrogen plans. The company will continue to work with the Spanish government "to generate the regulatory clarity and allocation of subsidies ..."

Cepsa had a fourth-quarter loss of 117 million euros, compared with a profit of 117 million euros a year earlier.

We remind, Cepsa and Air Europa have sealed an alliance whereby the energy company will supply 14.4 tons of SAF to the airline for one year to cover the first monthly Madrid-Havana flight. This is the first time that two companies in Spain have established a regular supply of this sustainable fuel for a specific air route. During the period of collaboration between Cepsa and Air Europa, the emission of around 50 tons of CO2 will be avoided, equivalent to planting 575 trees.

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South Korea's HD Hyundai Chemical Co. announced that it will collaborate with CJ CheilJedang Corp. to produce eco-friendly bio-naphtha and plastic products based on it, said Kedglobal.

The two companies signed a business agreement to establish an eco-friendly bio-circular system at the HD Hyundai Chemical headquarters in Daesan, South Chungcheong Province.

Under the agreement, HD Hyundai Chemical will receive a stable supply of bio-raw materials such as soybean oil and waste cooking oil from CJ CheilJedang.

HD Hyundai Chemical will use bio-raw materials to produce bio-naphtha and supply the eco-friendly plastic produced from it back to CJ CheilJedang. The eco-friendly plastic will be used in CJ CheilJedang's convenient home meal containers and packaging materials.

HD Hyundai Chemical plans to initially use 400 tons of bio-raw materials and produce a total of 12,000 tons of eco-friendly plastic products by the end of this year.

According to the company, it's the first time in South Korea that received International Sustainability and Carbon Certification (ISCC) throughout the entire process from the input of bio-raw materials to the production of bio-naphtha and products.

An HD Hyundai Chemical official said that it's the first time in Korea to receive International Sustainability and Carbon Certification (ISCC) throughout the entire process from the input of bio raw materials to the production of bio-naphtha and products.

ISCC certification is an international certification system that verifies environmental friendliness.

We remind, South Korea's HD Hyundai Oilbank is pursuing the construction of eco-friendly power plants powered by liquefied natural gas and blue hydrogen. The company's power generation subsidiary HD Hyundai E&F will build power generation facilities with steam capacity of 230 tons per hour and 290 megawatts of electricity, with commercial operation to start in 2025.

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Solvay and Carester have signed a memorandum of understanding to establish a partnership to pursue manufacturing opportunities in rare earths for the permanent magnets value chain in Europe, said the company.

Solvay will contribute industrial assets and operational experience, and Carester will add expertise in recycling end-of-life equipment, upstream market knowledge and related activities.

Solvay announced plans in 2022 to expand its rare earth operations at La Rochelle, France, including expansion into the magnet value chain, aiming to enhance European self-sufficiency as China increasingly dominates rare earth refining.

Carester was planned to build a plant at Lacq, France, dedicated to magnet recycling and the extraction of heavy rare earths from mining concentrates.

Europe's transition to electrification in the automotive industry, expansion of wind power energy and acceleration of digitalization necessitate the use of rare earth permanent magnets, Solvay said.

The alliance will "reinforce our dedication to the green energy transition and the rare earths industry through our investment in the magnet value chain, in partnership with Carester," said Philippe Kehren, CEO of Solvay. "By collaborating with established rare earths players outside of China, we're laying the groundwork for a powerful rare earths hub in Europe and establishing a strong European manufacturing base to supply the critically important magnets industry."

A Solvay spokesperson said it would not disclose potential investment “for business reasons, but considering Solvay's already large existing asset base, infrastructure and skilled staff in operation at the La Rochelle site, we are convinced that we can implement this investment in a fast and economic manner.”

We remind, Solvay and Huatai expand hydrogen peroxide capacity in China to meet growing photovoltaic demand. said the company. Building on its existing partnership with Huatai Chemical, the strategic alliance will enable the site to produce 48 kilotons of photovoltaic-grade hydrogen peroxide annually by 2025. This strategic investment not only reinforces Solvay's worldwide market leadership but also positions it to efficiently meet the rising demand from the photovoltaic industry, further supporting the growth of the renewable energy sector in Northern China.

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Malaysia's biodiesel production could rise to 1.8 MMt in 2024 if the government expands its 20% biodiesel mandatory program to more areas in the country, said Hydrocarbonprocessing.

Malaysia has rolled out a B20 program, where diesel for transportation must be blended with 20% palm-based biodiesel, in phases with most areas in the nation currently implementing 10% blending or a B10 program for the transportation sector.

"We can get (several blending) facilities up and running faster, then we obviously can go into B20 then," MBA president U.R. Unnithan told Reuters in an interview, adding that nationwide implementation would take more time and cost.

Unnithan said the group has submitted the recommendation to the government and hope expansion of the program could be done in the second half of this year, however further discussions with other stakeholders is needed before a decision is made.

Malaysia launched a nationwide mandatory 20% palm-based biodiesel blending for the transportation sector in 2020, however the program has only been implemented in some areas as the COVID-19 pandemic and multiple changes of government in recent years hampered progress.

The government has considered expanding its B10 biodiesel program, which requires the mandatory use of 10% palm oil, to the industrial sector and has a mandate to use biodiesel with 30% palm oil by 2025.

The Southeast Asian country exported nearly 300,000 tons of biodiesel last year, while around 1.1 million tons was consumed domestically.

Unnithan, however, cautioned that the government's intention to review price controls and fuel subsidies could hurt domestic demand for biodiesel.

We remind, Equinor, officially known as EQNR.OL, found itself at a critical juncture on Thursday when it made the difficult decision to halt operations at its Mongstad oil refinery in western Norway. This decision came in the wake of a fire that erupted within an electrical facility on the premises. Recognizing the potential risks posed by the situation, the company swiftly sprung into action, initiating the evacuation of the majority of its workforce as a precautionary measure. The primary objective behind the shutdown of production was unequivocally clear: to prioritize the safety and well-being of its personnel and to mitigate any potential escalation of the unfolding crisis.

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