MOSCOW (MRC) -- Crude oil futures dipped during mid-morning Asian trade June 8, amid softening demand cues from independent Chinese refineries, even as strong demand indicators from the West and slow progress in US-Iran nuclear talks, which could lift sanctions on Iranian crude, continue to support sentiment, reported S&P Global.
At 11.05am Singapore time (0305 GMT), the ICE Brent August contract was down 66 cents/b (0.92%) from the previous settle at USD70.83/b, while the July NYMEX light sweet crude contract was down 63 cents/b (0.91%) at USD68.60/b.
Ongoing investigations into China's independent refining sector regarding the illegal trade of government issued crude oil import quotas, as well as destocking activity amid strong crude prices, have resulting in easing demand.
According to preliminary data from the General Administration of Customs, China's crude imports slumped 14.6% on the year to a five-month low of 9.69 million b/d in May, S&P Global Platts reported earlier.
"Crude's rally came to a screeching halt overnight after WTI tested the USD70/b level and as China's imports dropped to a five-month low. The weakness in Chinese demand appears to be more of a story about China's private refining sector tentatively slowing purchases as they deal with investigations to address structural overcapacity," OANDA's senior market analyst, Edward Moya, said in a June 8 note.
However, the weakness in the market is expected to be temporary, as recovery in the West continues to buoy sentiment in the market amid easing travel restrictions and the strong seasonal summer demand.
Citing data from creator of location technology, TomTom, analysts at ANZ noted in a June 8 note that traffic in 15 European cities was as busy as in 2019. "This is the highest level of traffic since the pandemic began," they said.
"Travel data in the US continues to improve. The number of passengers passing through airport security checkpoints continues to climb strongly," ANZ analysts added.
Along with strengthening demand signals from the US and Europe, concerns of tightness in the oil markets are further amplified by sluggish progress in US-Iran nuclear talks, which are keeping Iranian crude exports at bay.
As MRC informed 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 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.