MOSCOW (MRC) -- Crude oil futures fell further in mid-morning trade in Asia Dec. 23 as bearish data from the American Petroleum Institute took the market by surprise, and as US President Donald Trump rejected a Congress-approved USD900 billion stimulus bill, reported S&P Global.
At 10:49 am Singapore time (0249 GMT), the ICE Brent February contract was down 78 cents/b (1.56%) from the Dec. 22 settle at US49.30/b, while the February NYMEX light sweet crude contract was down 75 cents/b (1.60%) at USD46.27/b. The markers closed down 1.63% and 1.98% respectively on Dec. 22.
The latest fall in crude prices came as the API reported an unexpected 2.7 million-barrel build in US crude inventories for the week to Dec. 18. Analysts surveyed by S&P Global Platts had been expecting a 4.7 million-barrel decline.
The API data also indicated little improvement in fundamentals in downstream oil product markets, showing a modest draw of 224,000 barrels in gasoline inventories and a 1.03 million-barrel build in distillate inventories.
"Even though traders are used to seeing such API numbers by now, I think that they are still being a little cautious going into the Christmas weekend by locking their profits," David Lennox, resource analyst at Fat Prophets, told S&P Global Platts Dec. 23.
Meanwhile, the political flip-flop over US fiscal relief measures continued as Trump called a US900 billion stimulus package passed by both the Senate and the House of Representatives a "disgrace".
In a video message posted to twitter, Trump said that he would ask the "Congress to amend this bill and increase the ridiculously low USD600 (direct payment) to USD2,000, or US4,000 for a couple".
"I'm also asking Congress to immediately get rid of the wasteful and unnecessary items from this legislation and just send me a suitable bill," he added.
Trump's statements have revived uncertainty over fiscal relief, and analysts expect any delay in the ratification of the package to weigh on oil demand and prices.
"Sentiment took a hit after President Trump asked Congress to amend the COVID-19 relief-funding package, leading crude oil prices lower ... a further delay in the arrival of stimulus funds may hinder a fragile economic recovery and thus dampen the energy demand outlook," DailyFX strategist Margaret Yang told Platts Dec. 23.
Lennox said the refusal of Trump to sign off on the bill has "put some fear back into the markets as without fiscal relief, the US economic climate will deteriorate and oil demand will not improve."
Other bearish developments putting pressure on prices include renewed travel restrictions to the UK after the emergence of a new strain of coronavirus, a stronger US dollar and a slowdown in Asian demand.
"A slowdown of purchases in the physical oil market may hint at a further price pullback as Asian oil refiners have almost fulfilled their needs for spot cargoes to be loaded in January and February, while the virus threat and a stronger US dollar also continue to weigh on prices," Yang said.
As MRC informed previously, 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% 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 decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.