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Crude oil futures up on signs of stronger downstream demand in the US

April 29/2021

MOSCOW (MRC) -- Crude oil futures ticked higher during mid-morning trade in Asia April 29, as sentiment in the market remained positive amid signs of strong downstream demand in the US, but the progress of the pandemic in India remained on the market's radar, reporte S&P Global.

At 11:17 am Singapore time (0317 GMT), the ICE Brent June contract was up 36 cents/b (0.54%) from the April 27 settle at USD67.64/b, while the June NYMEX light sweet crude contract rose 29 cents/b (0.45%) at USD64.15/b.

There was some bullishness in the market after the US' Energy Information Administration released its weekly data late April 28, which backed the narrative of a recovery in US oil demand.

Total products supplied, the EIA's proxy for demand, increased 8.7% on the week, in the week ended April 23 to 20.34 million b/d. The increase in implied products demand was largely powered by a 12.35% increase in implied distillates demand to 4.33 million b/d in the same period, even as implied gasoline demand edged 2.49% lower to 8.88 million b/d.

The increase in implied distillate demand sent distillate inventories 3.34 million barrels lower last week to 139.05 million barrels. Gasoline inventories, meanwhile, climbed 90,000 barrels to 235.07 million barrels even as Apple mobility data showed US driving activity edging 0.4% higher last week.

The headline increase in US crude inventories was 90,000 barrels, according to the EIA data, which put stocks 0.3% behind the five-year average and erased a surplus that has persisted since the week ended March 27, 2020. Even though crude inventories registered a rise, the market took it as a positive development, as the rise was much smaller than the 4.32 million-barrel build reported by the American Petroleum Institute on April 27.

The increase in US oil demand, as per the EIA report, came amid the market's assessment of improved US economic conditions. The Federal Reserve, on April 28, echoed the market's view of bullish economic conditions in the country, saying that amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened.

Elsewhere, however, concerns over the pandemic and its pernicious impact on economic activity have escalated. COVID-19 infection and fatality numbers in India, the third largest importer of crude oil, have shown no signs of abating, with the country reporting record 360,927 new cases and 3,293 deaths on April 27, latest data from John Hopkins University showed.

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