MOSCOW (MRC) -- Crude oil futures were marginally lower in mid-morning trade in Asia June 16 amid persistent concerns over demand recovery, reported S&P Global.
At 10:17 am Singapore time, on 16 June, ICE Brent August crude futures was 26 cents/b (0.65%) lower from June 15's settle at USD39.46/b, while the NYMEX July light sweet crude contract was 25 cents/b (0.67%) lower at USD36.87/b.
Sentiment took a risk-off tone in Asia trading, despite prices settling higher on June 15 during the US trading hours, amid news of additional economic support by the Federal Reserve.
"A full recovery to early March levels will need continued supply discipline, demand recovery, and time to work off US inventories and spare capacity," Axicorp chief global markets strategist Stephen Innes said in a June 16 note.
Concerns over a second wave of COVID-19 infections amid easing lockdowns continued to cloud the demand outlook.
The market is also looking towards fresh US inventory data to be released later in the week. The data last showed a substantial build, which dampened sentiment.
"A tall order indeed that could be prone to less satisfactory results over the short term, but a draw in this week's inventory data will go a long way to soothe supply concerns," Innes said.
On the OPEC+ front, some bullish sentiment emerged from reports that Iraq is adhering to the accord. Baghdad had signaled that it would sharply cut back on oil exports in June, Platts reported.
There were also concerns as to whether US shale production will increase as prices get supported by the OPEC+ cuts.
Meanwhile, the ICE Brent crude futures market structure had remained largely steady at the prompt, amid a lack of fresh drivers at the moment.
"Whether it (ICE Brent) can reverse last week's bearishness and embark on another bullish run remains to be seen, given that the contango spread is still relatively flat now compared to last month," OCBC analysts said in a June 16 note.
As MRC wrote previously, global oil consumption cut by up to a third in Q1 2020. What happens next in the oil market depends on how quickly and completely the global economy emerges from lockdown, and whether the recessionary hit lingers through the rest of this year and into 2021.
Earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.
We remind that, in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.