MOSCOW (MRC) -- Crude oil futures were higher during midmorning trade in Asia June 3 as the American Petroleum Institute reported a large draw in crude inventories, reinforcing the narrative that fundamentals in the US are improving, while Europe reopening provided further support to the market, reported S&P Global.
At 11:07 am Singapore time (0307 GMT), the ICE August Brent crude contract was up 52 cents/b (0.76%) from the previous settle at USD71.87/b while the NYMEX July light sweet crude contract was up 50 cents/b (0.73%) at USD69.33/b.
Data from the API showed a massive 5.36 million barrels draw in US crude inventories in the week ended May 28. This fueled the crude price rally in morning Asia trading, even though the API data also showed that US gasoline and distillate inventories rose 2.51 million barrels and 1.59 million barrels, respectively, in the same period.
The rise in downstream product inventories did not faze the market, which expected demand in the US to remain robust as the country's economy continues to fire on all cylinders. Furthermore, with the Memorial Day holiday kick-starting the summer driving season, gasoline demand is expected to benefit from pent-up demand for road travel.
Even prior to the Memorial Day holiday, US gasoline demand was already on an uptrend, with ANZ analysts saying in a June 3 note that data from Descartes Labs, a geospatial intelligence company, showed the country's gasoline demand had hit its highest level in the week ended May 29 since the pandemic began.
Meanwhile, Europe's reopening also augured improved oil demand. Major European economies, including the UK, Germany, France and Italy, are expected to see lockdown restrictions eased further through June. However, ANZ analysts have warned that a recovery remains patchy as the resurgence of the pandemic in Asia has led to protracted mobility restrictions, which are sapping oil demand.
As MRC wrote earlier, Indian refiners, anticipating a lifting of US sanctions, plan to make space for the resumption of Iranian imports by reducing spot crude oil purchases in the second half of the year. The world"s third-largest oil consumer and importer halted imports from Tehran in 2019 after former US President Donald Trump withdrew from a 2015 accord and re-imposed sanctions on the OPEC producer over its disputed nuclear programme.
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.