US petroleum inventories fallen below the pre-pandemic five-year average

MOSCOW (MRC) -- US petroleum inventories have fallen below the pre-pandemic five-year average with consumption accelerating but crude producers slow to respond to rising prices, signalling more supply is needed, reported Reuters.

Total stocks of crude and refined products outside the strategic petroleum reserve fell by 10 million barrels last week and are now down by 188 million barrels compared with the same point a year ago.

Total stocks have fallen in 38 out of the last 52 weeks as OPEC+ and US shale firms limit crude production even as product consumption recovers.

Inventories are 12 million barrels or 1% below the pre-pandemic five-year average for 2015-2019, according to data from the US Energy Information Administration.

The deficit is concentrated in crude, where inventories are 15 million barrels or 3% below the average, while there are still small surpluses in gasoline (3 million barrels or 1%) and distillates (2 million barrels or 1%).

The crude shortage has become especially acute around the delivery point for the NYMEX WTI contract at Cushing, Oklahoma, where crude stocks are 21% below the five-year average for 2016-2020.

The shortfall has pushed the WTI contract into a steep backwardation, with front-month futures trading at a premium of almost USD2.90 to the fourth delivery month, which is in the 7th percentile for all weeks since 2012.

On the refined products side, the volume of gasoline supplied to the domestic market hit a record 10.0 million barrels per day (bpd) last week, surging from 9.2 million bpd the previous week.

But gasoline supplied measures transfers from the primary petroleum system (refineries, import terminals, pipelines and tank farms) into the secondary system (wholesalers and retailers) rather than actual consumption by motorists.

As MRC wrote before, in early July, US crude stocks fell for the sixth straight week as refiners ramped up output in response to rising demand, according to the Energy Information Administration. Crude inventories fell by 6.7 million barrels in the week to June 25 to 452.3 million barrels, a steeper drop than the 4.7 million barrels expected by analysts in a Reuters poll.

We remind that 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.
MRC

MOSCOW (MRC) -- Buyout group Advent has agreed to sell German coating resins maker Allnex to Thailand’s PTT Global Chemical (PTTGC) for around EUR4 billion (USD4.75 billion), reported Reuters with reference to the companies' statements on Monday.

Allnex, whose products are used in the industrial metal, automotive and packaging industries, has annual revenue of EUR2 billion and employs 4,000 employees worldwide. The deal values Allnex at 12.2 times its annual core earnings.

Advent acquired Cytec Industries’ coating resins business in 2013, rebranded it Allnex and merged it with peer Nuplex in 2016.

PTTGC is a unit of Thailand’s energy group PTT, which is seeking to strengthen its chemicals business. The deal will improve Allnex’ access to raw materials and to the Asian market, which has strong growth potential for coating resins, the companies said.

The deal is expected to close in the fourth quarter of 2021.

As MRC wrote previously, PTTGC abruptly shut down three crackers at its petrochemical complex in Map Ta Phut on 14 April 2021 after a thunderstorm caused a power outage. No. 1 and 4 crackers and the recently launched No. 5 cracker on the site were off-line for around one week. The production capacities of No. 1 and 4 crackers are 461,000 and 515,000 mt/year of ethylene, whereas the new cracker can produce 500,000 mt/year of ethylene and 260,000 mt/year of propylene.

PTT Global Chemical is a leading player in the petrochemical industry and owns several petrochemical facilities with a combined capacity of 8.45 million tonnes a year.
MRC

MOSCOW (MRC) -- Russia's overall production of unmixed polyvinyl chloride (PVC) totalled 515,900 tonnes in the first half of 2021, up by 1% year on year. At the same time, two producers reduced their output, according to MRC's ScanPlast report.

June production of unmixed PVC in Russia was 83,800 tonnes versus 86,100 tonnes a month earlier, SayanskKhimPlast decreased its capacity utilisation. Overall output of polymer totalled 515,900 tonnes in January-June 2021, compared to 509,100 tonnes a year earlier. Two producers reduced their output, whereas Bashkir Soda Company and Kaustik, Volgograd managed to increase their production of resin.

The structure of PVC production by plants looked the following way over the stated period.

RusVinyl produced 29,900 tonnes of PVC in June, with emulsion polyvinyl chloride (EPVC) accounting for 2,300 tonnes, compared to 28,100 tonnes a month earlier. RusVinyl's overall output of resin reached 175,300 tonnes in the first half of 2021, compared to 177,600 tonnes a year earlier.

SayanskKhimPlast reduced its capacity utilisation last month and produced 23,400 tonnes of suspension PVC (SPVC), compared to 26,500 tonnes in May. The Sayansk plant managed to produce 156,900 tonnes of PVC in the fist six months of 2021, compared to 164,3000 tonnes a year earlier.

Baskhir Soda Company produced 23,300 tonnes of SPVC in June versus 23,800 tonnes a month earlier. The Baskhir plant's overall production of resin reached 140,500 tonnes in January-June 2021, up by 8% year on year.

Kaustik (Volgograd) produced 7,200 tonnes of SPVC last month, whereas this figure was 7,700 tonnes in May. The plant's overall production of resin reached 43,200 tonnes over the stated period versus 36,500 tonnes a year earlier.

MRC

1. U.S. crude and gasoline stocks fell

MOSCOW (MRC) -- U.S. crude and gasoline stocks fell and gasoline demand reached its highest since 2019, the U.S. Energy Information Administration said, signaling increasing strength in the U.S. economy, said Hydrocarbonprocessing. Crude inventories fell by 6.9 million barrels in the week to July 2 to 445.5 million barrels, the lowest since February 2020, and more than the expected 4 million-barrel drop estimated in a Reuters poll. Crude stocks have declined steadily for several weeks as refiners process more oil into gasoline, diesel and other products. Overall product supplied - a proxy for demand from end-users of fuels - rose to 20.9 million barrels per day (bpd), in line with the same trend two years ago prior to the coronavirus pandemic.

MRC

MOSCOW (MRC) -- Venezuela's state-run oil company PDVSA has started producing two upgraded crude grades for domestic refining, aiming at reanimating the country's much-needed output of motor fuels, reported Reuters with reference to a company document and sources close the decision.

Years of under-investment in PDVSA's 1.3 million-barrel-per-day capacity refining network and US sanctions since 2019 have led to intermittent scarcity of cooking gas, gasoline and diesel, making the nation more dependent on imports and forcing Venezuelans to line up for hours and even days to get fuel.

As Venezuela's refineries were originally built to process medium to light crudes, PDVSA's increasingly heavy oil output no longer meets the facilities' diet, forcing the company to decide every month whether to refine its limited stocks of light oil or use it as diluent for its flagship exportable grade Merey.

Following the restart of a key upgrader in June, operated by the Petrocedeno joint venture, PDVSA has scheduled the first cargo of light Zuata Sweet synthetic crude to be sent this month to its largest refinery, the 645,000-bpd Amuay, which remained mostly shut in June, according to the document and one of the sources.

PDVSA had stopped producing Zuata Sweet and other upgraded crudes in 2019 shortly after US sanctions deprived the firm and its private partners from the largest market for those grades, the US Gulf.

The state company last month also began production of a new upgraded crude grade, Hamaca 22, at neighboring project Petropiar, with the first 500,000-barrel cargo loading this week at the Jose port bound for Amuay, the document showed.

The company's fuel production has fallen since May after slightly rising in the first four months of the year. Venezuela also imported diesel to ease the lack of motor fuels.

Amuay's three-week paralysis, the continued outage of the El Palito refinery and low output at the Puerto La Cruz refinery contributed to the decline, for a total average of 193,000 barrels per day (bpd) of crude processed last month, 15% of the nation's installed capacity, the source said.

The 310,000-bpd Cardon has been the only refinery with stable output around 120,000 bpd this year, two sources added. PDVSA earlier this year began formulating a crude blend similar to its medium Leona by mixing grades from the Orinoco belt with diluents. That crude has since fed Amuay and Cardon, according to internal company documents.

The move to use blends and upgraded crudes for domestic refining is not only expected to allow more motor fuel output, but it would also free Mesa 30 crude to be used in production of exportable Merey, likely solving bottlenecks that in recent months have caused delays for loading cargoes bound for Asia.

As MRC informed before, in June 2021, Venezuela's political opposition has replaced members of the boards overseeing Citgo Petroleum Corp as factions in the movement led by Juan Guaido try to gain greater influence over Houston-based oil refiner. Citgo split from Venezuelan state-run oil company PDVSA in 2019 after the US imposed sanctions intended to oust Venezuela's President Nicolas Maduro. Then congress chief Juan Guaido appointed new boards and won US court recognition of their authority over the refining subsidiary.

We remind that in September 2020, Citgo Petroleum Corp said it did not plan to idle its 418,000 barrel-per-day (bpd) Lake Charles, Louisiana, refinery damaged by Hurricane Laura. Rumors have circulated since Laura’s passage over the Lake Charles area on Aug. 27 that Citgo was considering shutting the refinery for an indefinite period because of the extent of the damage and continuing low demand for motor fuels in the COVID-19 pandemic.

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.
MRC