MOSCOW (MRC) -- Crude oil futures were steady during mid-morning trade in Asia July 2 as the market awaited clarity on OPEC+'s production plans for August onwards, after the producer group failed to reach consensus at a fractious July 1 Joint Ministerial Monitoring Committee meeting, reported S&P Global.
At 10:26 am Singapore time (0226 GMT), the ICE September Brent futures contract was up 10 cents/b (0.13%) from the previous close at USD75.94/b, while the NYMEX August light sweet crude contract was up 8 cents/b (0.11%) at USD75.31/b.
The market remains in limbo after objections from the UAE soured proceedings at the JMMC meeting, forcing the committee to adjourn without reaching a consensus on a production recommendation for August onwards.
During the course of the JMMC, members had reached a tentative agreement to boost production by 400,000 b/d a month from August to December, shrinking the OPEC+'s collective output cut to about 3.76 million b/d from the 5.76 million b/d cut expected in July.
However, according to sources, tensions escalated after the UAE requested that its baseline production level, from which its quota is determined, be hiked significantly due to the capacity additions it has made over the last three years.
The UAE's baseline under the current pact, determined by its October 2018 production level, is 3.168 million b/d, but the UAE claims it is now closer to 4 million b/d. Increasing the UAE's baseline would allow it to pump more crude into the market.
The UAE's request was dismissed by the other members and the monitoring committee failed to reach a compromise, deciding to continue discussion on July 2. The full OPEC+ ministerial meeting that was scheduled to have started after the JMMC was also postponed to July 2.
"Talks are set to resume today in order to try to reach a deal. Failure to come to an agreement could mean that the group continues with current levels of production, which would mean that the market tightens even quicker," ING's head of commodities strategy Warren Patterson and senior commodities analyst Wenyu Yao said in a July 2 note.
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.