MOSCOW (MRC) -- The crude price rally stumbled Jan. 11, with futures settling mostly lower amid fresh pandemic demand growth concerns following the imposition of new lockdowns in Asia, reported S&P Global.
NYMEX February WTI settled up 1 cent at USD52.25/b, while ICE March Brent finished down 33 cents at USD55.66/b.
A fresh outbreak of coronavirus infections in Hebei province, near Beijing, has led to lockdowns in provincial capital Shijiazhuang and Xingtai, China's National Health Commission said Jan. 8, adding the epidemiological origin of the outbreak has not been identified. Residents have been barred from leaving, and public transport has been halted.
On Jan. 11, the NHC reported 103 new cases of infections in China, the highest daily rise since late July, with 82 out of the 85 local cases from Hebei.
"The rally with oil was getting out of hand and prices needed to pullback as the uncertainty over short-term crude demand remains elevated," OANDA senior market analyst Edward Moya said in a note. "Chinese crude demand has been a bright spot for the oil market, but that could quickly end if China steadily sees new clusters."
NYMEX February ULSD settled down 60 points at USD1.5735/gal, and February RBBO was down 2.15 cents at USD1.5208/gal.
Pandemic-related demand concerns weighed on gasoline cracks. The ICE New York Harbor RBOB crack against Brent edged down to USD8.28/b in afternoon trading, retreating from more than five-month highs reach Jan. 8.
The Platts northwest Europe gasoline Eurobob crack against Brent fell back to USD3.15/b, down from a 10-week high Jan. 8.
Total US gasoline inventories are expected to have climbed 3.2 million barrels higher in the week ended Jan. 8, analysts surveyed by S&P Global Platts said Jan. 11, putting stocks at around 244.3 million barrels.
US driving activity edged 0.2% higher in the week ended Jan. 8, according to Apple mobility data, remaining near levels last seen in late May and likely portending a weaker-than-normal post-holiday demand rebound. The five-year average of US Energy Information Administration data shows implied demand for gasoline is up around 2% in early January, as workers return from the end-of-year holiday.
Recent economic data also suggests that a second wave of pandemic lockdowns in the US is impacting labor markets fast than anticipated, likely weighing further on gasoline demand. December non-farm payrolls contracted by 140,000 jobs, US Bureau of Labor Statistics data showed Jan. 8, below market expectations of a slight increase in jobs.
A rising US dollar added to oil price headwinds. The ICE US Dollar Index rallied up to 90.48 in afternoon trading, on pace for the strongest close since Dec. 22.
As MRC informed previously, global oil demand may have already peaked, according to BP's latest long-term energy outlook issued in September 2020, as the COVID-19 pandemic kicks the world economy onto a weaker growth trajectory and accelerates the shift to cleaner fuels.
Earlier last 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.