MOSCOW (MRC) -- Crude oil futures ticked lower during mid-morning in Asia April 15 on profit-taking, after a bullish report from the US' Energy Information Administration sent prices hurtling nearly 5% higher overnight, while an improved demand forecast from the International Energy Agency provided a further boost to sentiment, reported S&P Global.
At 10:43 am Singapore time (0243 GMT), the ICE Brent June slipped 3 cents/b (0.04%) lower than the April 13 settle at USD66.55/b, while the May NYMEX light sweet crude contract was down 10 cents/b (0.16%) at USD63.05/b.
Prices ticked lower this morning as investors locked in profits after a meteoric rally overnight, which propelled the Brent and NYMEX light sweet crude markers to settle 4.57% and 4.94% higher at USD66.58/b and USD63.15/b, respectively.
The sharp rise was driven by better-than-expected headline numbers from the April 14 EIA report, which showed a 5.89 million-barrel decline in US commercial crude inventories to 492.42 million barrels in the week ended April 9. This draw was more bullish than the 2.9 million-barrel draw forecasted by analysts in a S&P Global Platts survey, and the 3.61 million-barrel draw reported by the American Petroleum Institute on April 13.
The EIA report also showed a 310,000-barrel build in US gasoline inventories, but this build was a source of relief to the market, as it was much smaller than the 5.57 million-barrel build reported by the API. Distillate inventories also declined counter-seasonally by 2.08 million barrels.
Crucially, the report showed an improvement in EIA's implied total refined product supplied metric, a proxy for demand, which climbed 1.09 million b/d to an eight-week high of 20.33 million b/d. Implied gasoline demand jumped 1.8% to 8.94 million b/d, the strongest since August, with implied demand also registering an 8% increase to a 13-week high of 1.36 million b/d.
Meanwhile, sentiment in the market was further boosted by an upward revision to the IEA's demand outlook, a day after OPEC unveiled an improved forecast. In its April 14 report, the Paris-based agency said that 2021 global oil demand will grow 230,000 b/d faster than previously forecast, expanding 5.7 million b/d to 96.7 million b/d.
"Oil markets fundamentals look decidedly stronger," the IEA said. "The massive overhang in global oil inventories that built up during last year's COVID-19 demand shock is being worked off, vaccine campaigns are gathering pace and the global economy appears to be on a better footing," the IEA reasoned.
As MRC informed earlier, 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 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 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.