MOSCOW (MRC) -- Crude oil futures ticked lower during mid-morning Asian trade April 28, as data from the American Petroleum Institute showed a build in US crude inventories, and the OPEC+ Joint Ministerial Meeting Committee recommended to uphold the earlier OPEC+ decision to increase production from May onwards, reported S&P Global.
At 10:55 am Singapore time (0255 GMT), the ICE Brent June contract fell 6 cents/b (0.09%) from the April 27 settle at USD66.36/b, while the June NYMEX light sweet crude contract was down 12 cents/b (0.19%) at USD62.82/b.
Data from the API took the market by surprise as it showed a significant 4.32 million-barrel build in US crude inventories in the week ended April 23. Market analysts had expected a marginal draw in crude oil inventory amid an uptick in refinery demand.
A dip in sentiment was, however, tempered by indications that downstream demand remained strong, with US gasoline and US distillate inventories falling 1.29 million barrels and 2.42 million barrels, respectively. Market participants will be looking to the more comprehensive US Energy Information Administration data, due to be released later April 28, for corroboration of the inventory changes, and for fresh pricing cues.
Meanwhile on April 27, the OPEC+ JMMC, co-chaired by Saudi Arabia and Russia, backed the coalition's earlier decision to gradually taper crude production cuts from May onwards, delegates told S&P Global Platts. As per the decision reached during the April 1 OPEC+ meeting, the producer group is due to raise its collective output by 350,000 b/d in May, another 350,000 b/d in June, and 441,000 b/d in July. Saudi Arabia, which is currently in the middle of an additional 1 million b/d cut, will also ease the cut by 250,000 b/d in May, 350,000 b/d in June and 400,000 b/d in July.
Delegates said the full OPEC+ meeting scheduled for April 28 will also be canceled, and that ministers will convene online again on June 1 to review their decision.
The endorsement from the JMMC comes after the OPEC+ Joint Technical Committee had raised its 2021 crude demand growth forecast on April 26 from 5.6 million b/d to 6 million b/d, bringing it in line with the 5.95 million b/d forecasted in the April 13 OPEC oil market report.
The OPEC+ coalition's rosy demand outlook is predicated on robust vaccination programs in the US and Europe, which are expected to fuel their respective economic rebound. OPEC+ is confident that the increased demand brought upon by an economic expansion in these regions will outweigh the demand-destruction caused by an escalation of the pandemic in countries such as India, Japan and Turkey.
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 polyethylene (PE) consumption totalled 356,370 tonnes in the first two month of 2021, down by 9% year on year. Shipments of exclusively low density polyethylene (LDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market was 246,870 tonnes in January-February 2021, up by 30% year on year. Supply of homopolymer PP and PP block copolymers increased.