MOSCOW (MRC) -- Crude oil futures were slightly higher during mid-morning Asian trade May 17, but any upside was limited by concerns over renewed coronavirus-related mobility restrictions in the region, reported S&P Global.
At 11:03 am Singapore time (0303 GMT), the ICE Brent July contract was up 34 cents/b (0.49%) from the May 14 settle at USD69.05/b, while the June NYMEX light sweet crude contract was up 31 cents/b (0.47%) at USD65.68/b.
The market continues to monitor the progress of the COVID-19 pandemic in Asia, where a growing list of countries have tightened mobility restrictions.
Singapore and Taiwan, two countries that have thus far been lauded for reigning in the virus, are among the countries grappling with the rising number of infections. Singapore, on May 14, had introduced new restrictions under what it termed as 'Phase 2 (Heightened Alert)' to stem the recent rise in infections, whereas Taiwan, on May 15, followed suit, raising its coronavirus alert level in the capital, Taipei, and the surrounding city, and imposing two weeks of restrictions.
Meanwhile, over in India, Delhi extended its lockdown until May 24, Chief Minister Arvind Kejriwal said on May 16. Other parts of India, including states such as Maharashtra and West Bengal, have also extended their mobility restrictions, resulting in large swathes of the country currently under some form of lockdown.
Out in the west, fears over the spread of the B.1.167 mutant strain has also dampened market sentiment, even as the UK prepares to take a major step out of its lockdown on May 17. Health Secretary Matt Hancock said that the variant is more transmissible and could soon become the dominant strain in the region, with Prime Minister Boris Johnson also expressing concern over the strain, saying it could thwart the UK's plan to fully unravel all restrictions by June 21.
Market analysts have cautioned that the prospect of a deterioration in the pandemic situation poses significant downside risk for oil prices, but have added that the market remains supported for now by the increase in demand from the US and Europe. They expect the front month Brent marker to trade noisily around the USD69/b level.
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 the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 576,270 tonnes in the first three month of 2021, up by 4% year on year. Low density polyethylene (LDPE) and high density polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market totalled 410,890 tonnes in January-March 2021, up by 56% year on year. Supply of homopolymer PP and PP block copolymers increased.