MOSCOW (MRC) -- Crude oil futures ticked up during the mid-morning trade in Asia March 3 as the market regained its footing after an overnight sell-off, with investors attention now focused on the upcoming OPEC+ meeting, reported S&P Global.
At 11:07 am Singapore time (0307 GMT), the ICE Brent May contract was up by 32 cents/b (0.51%) from the March 2 settle to USD63.02/b, while the April NYMEX light sweet crude contract was up by 26 cents/b (0.44%) to USD60.64/b.
Both markers have been on a downward trajectory since late last week, falling 5.16% and 5.95% from the Feb. 25 settle to close at USD62.70/b and USD59.75/b respectively on March 2.
The slight rise in prices comes as investors carry out bargain hunting activities to take advantage of low prices following the protracted sell-off, even as uncertainty over the upcoming OPEC+ meeting continues to grip the markets, potentially leading to unpredictable price movements.
"There is been an uninterrupted sell-off in crude since last week, as the market has progressively priced-in the return of supply following the US deep freeze, and for the rest of this week, there will be volatility in the market as the market awaits the OPEC+ meeting and grapples with erratic US stocks data," Vandana Hari, CEO of Vanda Insights told S&P Global Platts on March 3.
Market analysts generally expect the March 4 OPEC+ meeting to conclude with the coalition easing production quotas by up to 500,000 b/d from April onwards, and with Saudi Arabia choosing not to extend its unilateral 1 million b/d output cut. Both these outcomes could see up to 1.5 million b/d of oil returning into the market.
"If the total figure is between 1-1.5 million b/d, prices will move on after the OPEC+ meeting and start tracking the bubbling optimism over the economic climate and over rising oil demand," said Hari.
Meanwhile, API data, released on March 2, showed a massive 7.36 million barrel build in US crude inventories during the week ended Feb. 26. The impact of the build in US crude inventories however was somewhat offset by large draws in US product inventories, with gasoline inventories and distillate inventories plummeting 9.93 million barrels and 9.053 million barrels respectively.
Market participants will now be looking towards more comprehensive inventory data from the US Energy Information Administration, scheduled to be released later on March 3.
As MRC informed previously, oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook, according to an official with International Energy Agency's (IEA) statement.
We remind that the COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.
We also remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes “the creation of a gas chemical complex using methanol-to-olefins (MTO) technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex”.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020). Supply of exclusively PP random copolymer increased.