Texas braces for heavy rains, gales this weekend due to USGC storm activity

MOSCOW (MRC) -- As Texas prepares for heavy rains and possible gale force winds this weekend brought on by Tropical Depression 8 currently in the central Gulf of Mexico, the US Coast Guard has begun to restrict port activities, reported S&P Global.

The National Hurricane Center on June 23 issued a tropical storm watch from Port Mansfield, Texas, just above the Mexico border, to High Island, just north of Galveston, but noted that tropical storm warnings could be issued later today as the storm progresses westward towards land.

The NHC said that slow strengthening of the depression is expected and has the possibility to become a tropical storm to be named Hanna - in the next 12 to 24 hours.

"On the forecast track, the center of the depression is expected to move across the northwestern Gulf of Mexico today and Friday and make landfall along the Texas coast on Saturday," according to the NHC advisory 3, the latest issued on June 23.

As a precautionary measure, the US Coast Guard has issued Port Condition Whisky for the ports of Corpus Christi, as well as for the Houston-Galveston and the Freeport region. The ports remain open to both commercial and recreational activity but are on alert that gale force winds up to 39 mph are predicted to arrive in 72 hours.

The NHC said the storm is expected to bring between 3 and 5 inches of rain, with some portions of Texas and Louisiana receiving as much as 8 inches, which could result in flash flooding in some regions.

Flooding is expected to be the main concern of Tropical Depression 8, which could impact some refineries in Texas, home to about 30% of total US refining capacity, and refiners are keeping an eye on the storm.

Refiners like Phillips 66, which has Texas coastal refineries, are keeping a close eye on the weather.

"Phillips 66 closely monitors tropical storms, hurricanes and other weather events that could threaten our operations," a company spokesperson said July 23.

Tropical Storm Gonzalo is expected to enter the Gulf of Mexico early Monday, the NHC said, but impacts on the Windward Islands in the eastern Caribbean are expected on Saturday.

Hurricane watches could be expanded across all the Windward Islands but there is "significant uncertainty" in how strong Gonzalo will be when it moves across the islands and into the US Gulf of Mexico.

Gonzalo appears to have lost strength and is unlikely to make it into US Gulf Coast oil producing regions or near enough to the coast to impact US refineries.

"Looking at its current path of the storm, it does not look to be hitting major refineries," said Lennie Rodriguez, analyst with S&P Global Analytics, adding that impact on Venezuelan refining operations would be "minimal" because most Venezuelan refining capacity is offline.

As MRC informed earlier, US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

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

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

Dow restarts Texas, Argentina plants shut due to pandemic

MOSCOW (MRC) -- Dow Chemical restarted three polyethylene (PE) plants it shut in April on improving demand after widespread economic shocks in April and May, reported S&P Global with reference to a company spokeswoman's confirmation July 23.

"Based on current demand, the polyethylene production units have restarted," spokeswoman Ashley Mendoza said in an email.

The company confirmed in late April it had shut PE units in Freeport and Seadrift, Texas, and another in Bahia Blanca, Argentina, as well as two elastomers units in Plaquemine, Louisiana, in response to lower demand amid the global spread of the coronavirus pandemic. The shutdowns represented about 10% of the company's global capacity for packaging and specialty plastics.

The elastomers units, which produce more durable materials for which demand remains sluggish, have yet to restart.

"Dow continues to monitor the demand in automotive and other durable sectors and as conditions improve in those markets, is bringing those units online where needed," Mendoza said.

Dow CEO Jim Fitterling said during the company's second-quarter 2020 earnings call on July 23 that the unit shutdowns, as well as reduced operating rates across systems, sought to keep inventories in check when pandemic fallout siphoned demand.

He said Dow expects to see a gradual improvement in sectors that use durable plastics such as the automotive, construction and electronics segments as well as continued consumer-driven demand for non-durable items like food packaging, health and hygiene uses.

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports.

The Dow Chemical Company is an American multinational chemical corporation headquartered in Midland, Michigan, United States. Dow is a large producer of plastics, including polystyrene (PS), polyurethane, polyethylene, polypropylene, and synthetic rubber.
MRC

Stocks drop after Saudi prince warns of power demand pickup

MOSCOW (MRC) -- Stockpiles of refined oil products at the UAE's east coast port of Fujairah declined to a two-month low as of July 20, led by the biggest weekly plunge in seven months for fuels used for marine bunkers and power generation, reported S&P Global.

Inventories stood at 25.342 million barrels, down 5.7% on the week and the lowest since April 27, according to data released July 22 by the Fujairah Oil Industry Zone. Heavy distillates and residues, used in marine bunkers and for power generation, tumbled 14% to 14.09 million barrels, the biggest weekly drop since Dec. 2, 2019, and the lowest since April 27.

Global oil demand is on a "recovery path," Saudi Arabia's energy minister Prince Abdulaziz bin Salman said on July 15 after the OPEC+ decision to ease record production cuts. Seasonal consumption by many OPEC countries in the Middle East, where power generation for air conditioning is peaking, will further tighten the market, he said.

Saudi Arabia itself is focusing on direct crude burning for fuel oil in the current environment of depressed refining margins, according to Kevin Wright, lead Asia Pacific analyst in Singapore at data intelligence firm, Kpler. Middle East suppliers have been focused on their own domestic consumption of fuel oil, along with small export volumes to Pakistan from the UAE, he said.

Marine bunkers, by contrast, are not showing much of a pick up in this region, according to Apurva Mali, founder of Masc Co. DMCC, a broker in bunker fuels in Dubai. Because marine bunkers are sold on credit, it will not be known until later in the year how demand has been affected by the economic slowdown due to the pandemic, he said.

Total stockpiles have dropped for four consecutive weeks, the longest decline since the five-week slump from May 27 to July 1, 2019. Inventories have now dropped 17% from the record 30.71 million barrels set on June 1, as the coronavirus pandemic crippled demand for all kinds of oil products.

Middle distillates, which include gasoil, diesel, marine bunker gasoil, jet fuel and kerosene, were among the hardest hit from the demand slump as stockpiles more than doubled in April and May. Now they are falling, with middle distillates inventories down 9% in the latest week to 3.941 million barrels.

Light distillates jumped 17%, the biggest increase since April 27, to 7.311 million barrels, a three-week high. Products in the category are gasoline, gasoline blending components such as reformate, and naphtha and other light petrochemical feedstocks.

As MRC wrote before, Middle East crude producers Saudi Aramco and Abu Dhabi National Oil Company (ADNOC) will likely raise the official selling price differentials of their respective crude for the third consecutive month on the back of a strong uptick in the region's crude structure. Aramco is expected to raise the OSP differential of its Arab Light crude bound for Asia in August by between 80 cents/b to USD3/b.

We remind that in late July 2019, ADNOC said its Ruwais refinery west cracker was offline for maintenance.

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

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

Oil edges lower as US stimulus hopes offset US-China tensions

MOSCOW (MRC) -- Crude prices inched lower on 22 July as the market balanced talks of further US stimulus spending supported against rising US crude production and heightened US-China tensions, reported S&P Global.

NYMEX September WTI settled 2 cents lower at USD41.90/b and ICE September Brent gave back 3 cents to settle at USD44.29/b.

Oil prices pulled off morning lows following reports that Senate Republicans are considering an at least partial extension of the enhanced unemployment benefits that expire this month.

"We are seeing a bit of a rally on optimism that Congress can get some kind of short-term deal done to put money in the hands of consumers," Price Futures Group senior market analyst Phil Flynn said. "The theory being that those consumers will then put some of that money into their gas tanks and that should help those gasoline demand numbers."

NYMEX August RBOB settled up 31 points at USD1.2828/gal while August ULSD settled 93 points lower at USD1.2707/gal.

Oil futures came under pressure early in the session amid concerns that rising US-China tensions could threaten the Phase One trade deal between the two countries.

The US State Department early July 22 ordered Beijing to close its Houston, Texas consulate within 72 hours, according to media reports. The move marked an escalation of the already strained US-China relations after months of US President Donald Trump chiding Beijing for its handling of the COVID-19 coronavirus outbreak and blaming China for the global spread of the disease.

However, the downside price pressure was limited by the belief that Trump, who faces re-election this fall, is unlikely to allow trade tensions to cloud market outlooks, analysts said.

"The main takeaway is that while this looks like it is escalating pretty quickly, the general belief is still that we will not see complete deterioration of this relationship," OANDA senior market analyst Edward Moya said.

"(President Trump) needs a stronger economy and can't afford China not living up to the trade deal, so we are ultimately going to see this de-escalate eventually," he added.

Markets were also balancing a bearish US inventory report showing crude stockpiles climbed 4.89 million barrels and crude production ticked 100,000 b/d higher in the week ended July 17. But the top-line crude build was partially offset by steep declines in gasoline inventories, which fell 1.8 million barrels last week, putting stockpiles just 6.9% above the five-year average, in from as much as 12.6% in mid-April.

Looking forward, Tropical Depression seven was upgraded to Tropical Storm Gonzalo early July 22 as the storm's wind speed picked up to 75 miles an hour, and expectations are for it to reach hurricane status by July 23, according to the National Hurricane Center data.

Current NHC predictions have Gonzalo moving over Trinidad and Tobago and Venezuela by early July 26 morning into the mouth of the southern Gulf of Mexico.

And while the NHC said it expects strengthening to continue "over the next couple days with a leveling off," it is too soon to gauge what impact, if any, it will have on oil and gas infrastructure in the Gulf of Mexico.

As MRC informed 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.

And 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 DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

Equinor beats earnings forecasts as refinery and trading shines

MOSCOW (MRC) -- Equinor reported a drop in second-quarter operating profit but a strong performance from its refinery and trading business helped to counter a coronavirus-led slump in oil and gas prices allowing the group to beat forecasts, said Hydrocarbonprocessing.

The Norwegian oil and gas company reported an 89% slump in adjusted earnings before interest and tax (EBIT) to USD350 million (274.7 million pounds) in the April-June quarter, compared with USD3.15 billion in the year-ago period.

A poll of 25 analysts compiled by Equinor had forecast an adjusted operating loss of USD200 million. Equinor’s three oil exploration and production businesses, E&P Norway, E&P International and E&P USA, made losses, but profits increase at its refinery and trading division.

Chief Executive Officer Eldar Saetre said he saw pressure on oil prices increasing as OPEC+ is set to ease record cuts imposed after oil prices crashed due to the COVID-19 impact. He also told Reuters that there was still a lot of flexible production, such as U.S. shale, which could come back quickly to the market.

Saetre said he expected European gas demand to return to pre-pandemic levels in 2021 after the company deferred “significant volumes” of gas production in the quarter as prices fell by almost 60% from a year ago. The Norwegian government has imposed oil output limits from June to December this year, backing efforts by the OPEC+ and others to support prices.

Analysts at Sparebank 1 Markets said the performance was driven by exceptional results from crude and liquids trading, extracting value from the market “contango” and selling crude to Asia at higher prices in the forward market. Equinor shares were up 1.7% by 0923 GMT, outperforming a wider European oil and gas index .SXEP, which was down 0.5%.

Equinor’s total oil and gas output was flat at 2 million barrels of oil equivalent, despite production cuts at home and abroad, helped by ramp-up of its Johan Sverdrup oilfield. Adjusted for transactions and curtailments, output rose by 4%.

Equinor gave no production guidance for 2020, but reiterated its goal of increasing output by 3% per year from 2019 to 2026. The majority state-owned company maintained a quarterly dividend of USD0.09 per share, identical to the first quarter but down from USD0.27 in October-December. Capital spending guidance for this year was unchanged at USD8.5 million.

Equinor has also kept its long-term price assumptions, which include crude oil price of $USD0 a barrel in 2030, unchanged, unlike other European majors. It plans to update the price outlook, which could impact assets values, in the third-quarter.

As MRC informed earlier, in March 2018, Norway’s Statoil announced plans to change its name to Equinor, reflecting its commitment to become a broad energy company rather than one focused only on oil. Equinor holds an 82-percent stake in the methanol plant, while ConocoPhillips owns the rest.

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.
MRC