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Crude oil futures rise on market optimism of global economic recovery

April 27/2021

MOSCOW (MRC) -- Crude oil futures were higher during mid-morning trade in Asia April 27, as the market grew optimistic of a US-led global economic recovery, and rallied behind the OPEC+ Joint Technical Committee's upward revision of its demand forecast, reported S&P Global.

At 11:38 am Singapore time (0338 GMT), the ICE Brent June contract was up 38 cents/b (0.58%) from the April 26 settle at USD66.03/b, while the June NYMEX light sweet crude contract was up 38 cents/b (0.6%) at USD62.29/b.

Market analysts said that bullishness over the US economic recovery has trickled down to the crude oil market, as an increase in the country's economic activity is expected to shore up energy demand.

"The economic recovery is accelerating due to tremendous success with vaccine rollouts and on optimism that the economy will be fully reopened in June," Edward Moya, senior market analyst at OANDA, said in an April 27 note.

"The world's largest economy is expected to have grown by 6.5% in the first quarter, but traders should not be surprised if it is a lot closer to 7%," he added ahead of the April 29 release of the US' Q1 GDP figures.

Meanwhile, analysts said that an improved demand outlook for Europe has also lifted sentiment in the market. COVID-19 infection numbers have been dropping in major European economies and countries such as France, Italy and Greece have moved to ease their mobility restrictions, according to media reports.

The prospect of demand recovery in the west has given the market some respite from the deterioration of the pandemic in parts of Asia, especially in India and Japan. A debilitating wave of the coronavirus in India and Japan has limited the upside in the market, with Moya saying "concerns (over) crude demand (in) India and Japan have kept oil prices from participating with the broader rally in commodities."

The OPEC+ Joint Technical Committee also expressed concern over the rise in COVID-19 infection numbers in countries such as India and Japan, but nevertheless gave more weight to the improving economic prospects in the west and raised its 2021 crude demand growth forecast from 5.6 million b/d to 6 million b/d, in line with 5.95 million b/d forecasted in the April 13 OPEC oil market report.

As MRC informed earlier, COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.

We remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegazs existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes the creation of a gas chemical complex using methanol-to-olefins (MTO) technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated polyethylene (PE) consumption totalled 356,370 tonnes in the first two month of 2021, down by 9% year on year. Shipments of exclusively low density polyethylene (LDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market was 246,870 tonnes in January-February 2021, up by 30% year on year. Supply of homopolymer PP and PP block copolymers increased.


mrcplast.com
Author:Margaret Volkova
Tags:Asia, Europe, PP, PE, crude and gaz condensate, PP block copolymer, homopolymer PP, propylene, LDPE, ethylene, petrochemistry, Gazprom neft, Sibur Holding, Shurtans Gas-Chemical Plant, Russia, USA, Uzbekistan, Japan.
Category:General News
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