MOSCOW (MRC) -- Crude oil futures fell further during mid-morning trade in Asia June 18, extending overnight losses, as risk aversion gripped the market after hawkish signals from the US Federal Reserve, even as the global demand recovery narrative remained intact, reported S&P Global.
At 10:50 am Singapore time (0250 GMT), the ICE August Brent futures contract was down 64 cents/b (0.88%) from the previous settle at USD72.44/b, while the NYMEX July light sweet crude contract was 56 cents/b (0.79%) lower at USD70.48/b.
The Brent and the NYMEX light sweet crude markers had fallen 1.76% and 1.54% overnight to close at USD73.08/b and USD71.04/b respectively, halting the recent dizzying rally.
Vandana Hari, CEO of Vanda Insights, told S&P Global Platts on June 18 that the downturn in prices comes as the market consolidates after recent gains, and was triggered by a hawkish tilt in the US Federal Reserve's dot plots from a meeting concluded June 16.
The dot plots show that Federal Reserve officials are leaning towards two interest rate increases by the end of 2023 based on median estimates. The prospect of higher rates has fueled risk-off sentiment in broader financial markets.
Some analysts said oil prices also faced headwinds from concerns over the deteriorating pandemic situation in the UK, which reported 11,007 new COVID-19 infections June 17, the highest since Feb. 19, government data showed. That surge despite high vaccination rates has called into question the nascent recovery on the pandemic front in the rest of the western hemisphere, analysts said.
However, Hari said that the global demand recovery narrative remains intact despite the surge in UK cases.
We remind that 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.