MOSCOW (MRC) -- Crude oil futures were higher during mid-morning trade in Asia July 27 as a weakened US dollar prompted buying activity, but upside was limited as the rising number of COVID-19 cases globally sapped market sentiment, reported S&P Global.
At 11:17 am Singapore time (0317 GMT), the ICE September Brent futures contract was up 46 cents/b (0.62%) from the previous close at USD74.96/b, while the NYMEX September light sweet crude contract rose 35 cents/b (0.49%) at USD72.26/b. The ICE Brent and the NYMEX light sweet crude markers had edged up 0.54% and down 0.22%, respectively, on July 26, following a directionless trading session.
The uptick in prices comes amid the depreciation of the US dollar ahead of the US central bank's Federal Open Market Committee meeting, with the ICE US dollar index trading at 92.61 at 11.00 am, down 0.35% from the July 23 close.
A weaker US dollar makes dollar denominated assets such as oil futures more attractive for buyers holding foreign currency, and whips up appetite for such assets.
Meanwhile, analysts said the rapid spread of the delta variant of the coronavirus has created significant downside risk for the oil market, as it has raised the prospect of extended and more stringent mobility restrictions. Citing the spread of the delta variant both domestically and internationally, US White House press secretary Jen Psaki said on July 26 that the country will maintain its existing coronavirus travel restrictions, resisting pressure from the travel industry and US allies to ease them, media reports said.
A similar trend of rising cases has been seen all over the world, including in the UK, which boasts one of the highest vaccination rates in the world. Chancellor Angela Merkel's chief of staff, Helge Braun, said July 25 that COVID-19 infections in Germany could surge to 100,000 a day in two months unless more people get vaccinated.
"New COVID-19 cases have been rising in Asia for a few weeks now, but sentiment in the oil market is starting to deteriorate as infections rise in the heavy energy-consuming countries of the west," Avtar Sandu, senior commodities manager at Phillips Futures, said July 27.
As MRC informed earlier, Saudi Arabia, the world's top crude oil exporter, will supply full contractual volumes of August-loading crude to at least five Asian customers. However, Saudi Aramco has turned down two of the buyers' requests for extra barrels.
We remind that Mukesh Ambani, chairman and managing director of Reliance Industries Ltd (RIL), said in June he expects the company's deal with Saudi Aramco to materialise this year. Meanwhile, Yasir Al-Rumayyan, chairman of Saudi Aramco and the Governor of the Public Investment Fund, joined the board of Reliance as an independent director.
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 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High denisty polyethylene (HDPE) shipments decreased. At the same time, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.