Crude oil futures up in Asia on bargain hunting, but upside may be limited by delta variant outbreaks

MOSCOW (MRC) -- Crude oil futures were higher in mid-morning trade in Asia Aug. 20 amid bargain hunting by investors after a sixth straight session of decline in US trade overnight, although the upside was expected to be limited as delta variant outbreaks in key oil-consuming economies and US Federal Reserve signals weighed on the demand outlook, reported S&P Global.

At 11:57 am Singapore time (0357 GMT), the ICE October Brent futures contract was up 32 cents/b (0.47%) from the previous close at $66.77/b, while the NYMEX September light sweet crude contract was 34 cents/b (0.53%) higher at $64.03/b.

"Crude oil prices rebounded slightly on Friday morning as the US Dollar retreated from an eight-month high. Yet the overall trend for oil remains bearish-biased," Daily FX Strategist Margaret Yang told S&P Global Platts Aug. 20.

"WTI has declined six days in a row, falling 8.3%. This may encourage some short-term bargain hunting," she added.

However, market watchers doubted the price rebound could be sustained.

"The delta variant is casting the biggest cloud over the oil market. The recent outbreaks have raised concerns about the sustainability of the economic recovery," ANZ Research analysts in a note Aug. 20.

"Although oil demand is expected to slow, it won't cut off the path to normalization... Demand in Europe and the US remains robust, as mobility continues to improve. Overall, this should see the market remain tight, with rising vaccination rates to lead to an improvement in sentiment in the latter part of the year."

Several analysts noted that crude futures last fell for six consecutive sessions in February 2020, in the lead-up to pandemic lockdowns across the globe.

"WTI crude's six-day losing streak seems a bit overdone but for it to stop, it might need a sign from OPEC+ that they might hold off on plans to ramp up output," OANDA senior market analyst Edward Moya said in a note.

In addition, the US Federal Reserve has signaled it could start tapering bond purchases as early as September, which could spur a rise interest rates and add to downward pressure on energy demand in coming months.

As MRC informed earlier, crude oil stockpiles fell modestly last week, while gasoline inventories dipped to their lowest level since November, according to the US Energy Information Administration. Crude inventories fell by 447,000 barrels in the week to Aug. 6 to 438.8 million barrels, compared with analysts' expectations in a Reuters poll for a 1.3 million-barrel drop. Overall crude inventories have been on the decline for several weeks due to increased demand.

We remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.
MRC

MOSCOW (MRC) -- PetroChina Liaoyang Petrochemical Co Ltd , part of the Chinese petrochemical major - PetroChina, has successfully started up its new polypropylene (PP) plant this week, according to CommoPlast with reference to market sources.

Based in Liaoning City, Liaoyang Province, China, the new PP plant has a production capacity of 300,000 tons/year.

A source closed to the company informed that they has achieved prime grade production since 5 pm, 18 August, 2021, hence the commercial run was officially started up.

As MRC reported previously, the construction of a new PP plant in Liaoning began in September, 2019, and was completed in early June, 2021.

According to MRC's ScanPlast report, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

PetroChina Company Limited, is a Chinese oil and gas company and is the listed arm of state-owned China National Petroleum Corporation, headquartered in Dongcheng District, Beijing. It is China's biggest oil producer.
MRC

MOSCOW (MRC) -- On Wednesday, the first export trades for Turkmenbashi refinery's polypropylene (PP) were held at the State Commodity and Raw Materials Stock Exchange of Turkmenistan after after a four-month break. Demand for PP was strong, all quantities of PP put up for auction were sold out during one trading day, according to ICIS-MRC Price report.

Market participants said 2,500 tonnes of Turkmenbashi refinery's PP raffia grade to be sold for export were put up for auction at the State Commodity and Raw Materials Stock Exchange of Turkmenistan back a week earlier, but there was no demand due to a high starting price (USD1,650/tonne FOB/FCA).

This Wednesday, 18 August, already 3,500 tonnes of PP raffia grade were put up for export sales. The starting price was set at USD1,300/tonne FOB/FCA. Demand for PP was good during the trades, all deals were agreed at USD1,400/tonne, FOB/FCA.

Deals were done with shipment within three months.

The previous export trades for Turkmenbashi refinery's PP were held back on 13 April 2021, and only 500 tonnes of PP raffia grade were sold then at USD1,775/tonne FOB/FCA.
MRC

MOSCOW (MRC) -- French energy logistics firm Rubis suffered only minor damage to its fuels distribution network in Haiti following last weekend’s earthquake, reported Bloomberg.

The earthquake in southwest Haiti on 14 August is estimated to have killed more than 2,000 people. Shortly after the quake, heavy rainfalls from tropical storm Grace hit the region.

Rubis, which has been operating in Haiti since the acquisition of Dinasa and its subsidiary Sodigaz in May 2017, is relieved as all employees are safe and the impact on operations is limited.

Of the 125 fuel service stations operated by Rubis’s Dinasa affiliate, only one was knocked out by earthquake. Three others were damaged but remained operational, the company said.

Rubis added that it would prioritise fuel supplies in Haiti to essential facilities, especially hospitals.

As MRC informed before, bulk liquid storage player Rubis Terminal says its fourth-quarter 2020 storage revenues have risen 30% year on year (YOY) to EUR56.5 million (USD68.4 million), and that it has “significantly increased” its exposure to chemical and biofuels storage following its acquisition last year of Terminales Portuarias (Tepsa; Madrid, Spain).

Rubis, a terminals business joint venture (JV) between fund manager I Squared Capital (ISC) and Rubis Group (Paris, France), says its pro-forma share of revenues from chemicals is now at 36% compared to 31% during the first half of 2020, while biofuels storage now makes up 5% of its pro-forma revenues. “The company has been steadily decreasing its exposure to fuel from 70% of sales in 2016 to currently around 50% of sales,” it says. Rubis completed its acquisition of Tepsa in October 2020 for an undisclosed amount.

The JV’s fourth-quarter rise in sales included 9% organic growth, it says. Full-year 2020 sales rose 10% over 2019 to EUR186 million, it adds.

We remind that Russia's output of chemical products rose in June 2021 by 10.2% year on year. However, production of basic chemicals increased year on year by 8.2% in the first six months of 2021, according to Rosstat's data. June production of polymers in primary form was 937,000 tonnes versus 956,000 tonnes in May. Russia's overall output of polymers in primary form totalled 4,460,000 tonnes over the stated period, up by 12.8% year on year.
MRC

MOSCOW (MRC) -- Angarsk Polymers Plant has stopped its low density polyethylene (LDPE) production because of emergency shutdown, according to ICIS-MRC Price Report.

The plant's customers said Angarsk Polymers Plant took off-stream its LDPE production on 13 August because of the technical problems. According to preliminary data, the producer intends to resume production of polyethylene in the coming days.

The plant's annual production capacity is about 75,000 tonnes.

As reported earlier, Angarsk Polymers Plant had shut its facilities for scheduled maintenance works from 21 June to 1 August.

Angarsk Polymer Plant (controlled by Rosneft through OOO Neft-Aktiv) is the only petrochemical full-cycle plant in Eastern Siberia. The bulk of the produced ethylene is used by the plant for the production of LDPE, styrene monomer (SM) and polystyrene (PS). Straight-run gasoline and hydrocarbon gases, mainly produced by OAO Angarskaya NHK, are the feedstocks for the plant.
MRC