MOSCOW (MRC) -- Crude oil futures were slightly higher, but rangebound, during mid-morning trade in Asia May 18, as optimism over increased oil demand from the US and Europe kept the market afloat, reported S&P Global.
At 11:24 am Singapore time (0324 GMT), the ICE Brent July contract was up 17 cents/b (0.24%) from the May 17 settle at USD69.63/b, while the June NYMEX light sweet crude contract was up 10 cents/b (0.15%) at USD66.37/b.
The market brushed aside news of Asia's worsening COVID-19 situation and turned its attention towards the recovery in the US, where a rebound in economic activity has propped up downstream oil product demand.
Apple mobility data showed that US driving activity was up by around 1% in the week to May 14, reaching a nine-month high that is 142.04% of the January 2020 baseline.
Furthermore, the US Transportation Security Administration said the number of people passing through US airports on May 16 was 1.85 million, the highest since March 2020. This is just 30% lower than the equivalent seen on the same day in May 2019, indicating that US domestic air travel demand is recovering.
The market is also optimistic of Europe's prospective oil demand as major economies are gradually easing their mobility restrictions. The UK took a major step out of its lockdown on May 17, allowing social gatherings in limited numbers, activities such as indoor dining and replacing the ban on international travel with a more lenient set of rules.
Meanwhile, Italy, on May 17, announced it is pushing back its nightly coronavirus curfew by an hour to 11 pm from May 18 and is easing other mobility restrictions in areas where infections are low. France is also set to push back its nightly curfew by two hours to 9 pm from May 19, while lifting some restrictions on leisure venues and outdoor dining.
Over in Asia, concerns over renewed mobility restrictions in India, Japan and Southeast Asia were mollified by hopes that oil demand from the region's economic powerhouse China will remain strong.
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.