Crude prices retreat as US stimulus hopes fade, OPEC+ quota cuts loom

MOSCOW (MRC) -- Oil futures settled lower Oct. 19 as overnight optimism that the White House and congressional Democrats could reach a deal on stimulus spending faded in afternoon trading, reported S&P Global.

NYMEX November WTI settled 5 cents lower at USD40.83/b, and ICE December Brent was down 31 cents at USD42.62/b.

Oil futures had been holding around even in early US trading but began moving steadily lower mid-day as stimulus hopes faded ahead of an Oct. 19 meeting between House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin.

On Oct. 18, Pelosi issued a 48-hour deadline for the White House to reach a deal on spending in order to pass a bill ahead of the November elections.

NYMEX November RBOB settled 65 points lower at USD1.1623/gal, and November ULSD was down 2.1 cents at USD1.1581/gal.

Oil price declines extended in aftermarket trading, especially for RBOB, which at 1645 GMT was down 1.12 cents at USD1.1576/gal.

Ministers on a key OPEC+ monitoring committee acknowledged a slowdown in the oil market's recovery and vowed to be proactive in preventing a slide in prices, with the scheduled tapering of the coalition's output cuts looming at year's end.

"We will do what is necessary in the interest of all," Saudi energy minister Prince Abdulaziz bin Salman said in his opening remarks to the OPEC+ Joint Ministerial Monitoring Committee meeting Oct. 19.

"Crude prices remained heavy after both the OPEC+ JMMC meeting did not discuss any changes to the tapering plan and as stimulus disagreements remain and the prospects of getting a deal done fade into next year," OANDA senior market analyst Edward Moya said in a note. "The Saudis and Russians are getting along, but it will get ugly real fast if the fall surge/winter wave of the virus delivers a greater hit to the demand outlook."

OPEC and 10 partners are set to ease their 7.7 million b/d collective production cuts by about a quarter to 5.8 million b/d at the start of 2021, but fading demand growth and the resurgence of Libyan supplies have muddled the path to more stable and higher oil prices.

Delegates have told S&P Global Platts the bloc may consider extending the cuts, but any new deal would require delicate political negotiations and potentially some concessions to countries weary of reining in production.

The ICE WTI-Brent spread narrowed to minus USD1.59/b in afternoon trading, the tightest spread since mid-March as resurgent European oi demand outlooks dimmed amid a resurgence of COVID-19 coronavirus.

As MRC informed earlier, global oil demand is forecast to peak by around 2040 because transport-fuel demand will decline steeply and economic growth will slow in the post-coronavirus world, the Institute of Energy Economics, Japan, said in its annual IEEJ Outlook 2021 on Oct. 15.

We remind that global oil demand may have already peaked, according to BP's latest long-term energy outlook, as the COVID-19 pandemic kicks the world economy onto a weaker growth trajectory and accelerates the shift to cleaner fuels.

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 ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC

Output of chemical products in Russia grew by 6.1% in January-September 2019

MOSCOW (MRC) -- Russia's output of chemical products rose in September 2020 by 6.7% year on year.
At the same time, production of basic chemicals increased year on year by 6.1% in the first nine months of 2020, according to Rosstat's data.

According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-September output.

September production of benzene fell to 92,300 tonnes from 102,000 tonnes a month earlier due to scheduled shutdowns for maintenance at several producers. Overall output of this product reached 1,010,600 tonnes over the stated period, down by 1.2% year on year.

September production of sodium hydroxide (caustic soda) were 108,000 tonnes (100% of the basic substance) versus 99,200 tonnes a month earlier. Overall output of caustic soda totalled 945,600 tonnes in the first nine months of 2020, down by 1.6% year on year.

2,014,000 tonnes of mineral fertilizers (in terms of 100% nutrients) were produced in September versus 1,933 mln tonnes a month earlier. Overall, Russian plants produced slightly less than 18,500,000 tonnes of fertilizers in January-September 2020, up by 3.5% year on year.

Last month, the production of primary polymers decreased to 852,000 tonnes against 888,000 tonnes in August due to shutdowns in Tomsk, Ufa and Kazan. Overall output of polymers in primary form totalled 7,480,000 tonnes over the stated period, up by 16.4% year on year.
MRC

Chinese Zhongmei Yulin to start up new LDPE/EVA plant by November

MOSCOW (MRC) -- Shaanxi Yanchang Zhongmei Yulin phase II new low density polyethylene (LDPE)/ethylene-vinyl-acetate (EVA) plant is slated to startup by November 2020, reported CommoPlast with reference to market sources.

Based in Shaanxi, China, the LDPE/EVA swing plant has a production capacity of 300,000 tons/year. It is expected to startup with production of LDPE and then following by EVA.

A source closed to the company informed that EVA will be the core production focus for this plant, hence shall not be impacting much on PE market in China.

As reported earlier, Shaanxi Yanchang Zhongmei Yulin Energy and Chemical Co Ltd shut it’s polypropylene (PP) 2 and linear low density (LLDPE) units for scheduled turnaround on 1 August, 2016. Meanwhile, its MTO, PP1 and high density polyethylene (HDPE) units were shut on 8 August 2016. Based in Shaanxi, China, the company has a PP1, PP2, HDPE and LLDPE units each with a production capacity of 300,000 ton/year. The units are expected to remain off-stream for 45 days.

According to MRC's DataScope, September EVA imports to Russia fell by 30,32% year on year to 2,38 tonnes from 3,420 tonnes a year earlier, and overall imports of this grade of ethylene copolymer into the Russian Federation dropped in January-September 2020 by 9,85% year on year to 26,340 tonnes (29,220 tonnes a year earlier).
MRC

Haiguo Longyou Petrochemical starts trial run at new cracker in China

MOSCOW (MRC) -- Haiguo Longyou Petrochemical (previously known as Daqing Lianyi Petrochemical) has conducted trial production on its new cracker since 17 October 2020, reported CommoPlast wth reference to market sources.

However, market sources informed that the commercial startup is slated by end of October- beginning of November 2020.

Based in Heilongjiang, China, the company has a 5.5 million tons/year heavy oil catalytic cracker, meanwhile both of its polypropylene (PP) new plants with total production capacity of 550,000 tons/year has conducted trial run in end- September, using outsource propylene cargoes as well.

On the other hand, the company's 400,000 tons/year high denisty polyethylene (HDPE)/linear low density polyethylene (LLDPE) swing plant is pending for further progress.

As MRC informed before, the company's polyethylene (PE) plant will start with production of LLDPE grade during October, following by HDPE injection during November period, and HDPE pipe during December. Meanwhile, its PP plants will start with homo-PP yarn grade for 2 months, and switching to homo-PP fiber in December.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Haiguo Longyou Petrochemical Co Ltd is headquartered in China. The company's line of business includes the wholesale distribution of chemicals and allied products.
MRC

Libya troubled oil sector sees new revival

MOSCOW (MRC) -- Libya’s oil sector, shattered by unrest since the toppling of long-time leader Muammar Gaddafi in 2011, is back on the rise, said Hydrocarbonprocessing.

The easing of a blockade by eastern forces, which had cut output by more than 90% to around 100,000 bpd, has seen production recover to about 500,000 bpd. The government in Tripoli expects that to double by year-end. But after years of repeated shutdowns, damage to infrastructure and lack of investment, a return to the country’s pre-civil war capacity of 1.6 million bpd appears some way off.

National Oil Corp (NOC) subsidiary Arabian Gulf Oil Company (AGOCO) is producing around 190,000-200,000 bpd. The company has not yet restarted the al-Bayda or Nafoora oilfields because pumping is carried out through Es Sider port, which remains under force majeure.

Libya’s biggest oilfield resumed operations on Oct. 11 at an initial production rate of around 40,000 bpd. By Oct. 19, the field was already producing at around half its 300,000 bpd capacity. Crude from the field feeds the 120,000 bpd Zawiya oil refinery, with the rest exported from the Zawiya oil terminal. Three 600,000 barrel cargoes are slated for export in October.

NOC lifted force majeure on loadings on Sept. 19. Unipec loaded the first cargo from the terminal shortly after.

NOC lifted force majeure at the terminal on Sept. 22. Shipping sources expect loadings to average around 80,000 bpd in October. The 70,000 bpd oilfield is expected to begin its restart on Oct. 24.

As MRC informed before, US crude stocks moved lower last week as Hurricane Delta shut in Gulf of Mexico output and exports hit a 14-month low, according to US Energy Information Administration data showed Oct. 15.

We remind that in August, 2020, US refiner Phillips 66 said it plans to reconfigure its refinery in Rodeo, California to produce renewable fuels from used cooking oil, fats, greases and soybean oils.

We also remind that 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 ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.
MRC