Oil prices jump to three-year high on back of supply shortage

Oil prices jump to three-year high on back of supply shortage

MOSCOW (MRC) -- Oil prices jumped to a three-year high above USD85 a barrel on Friday, on forecasts of a supply deficit over the next few months, spurred by rising demand due to the easing of travel restrictions, reported Reuters.

Brent crude futures were up 77 cents, or 0.9%, at USD84.77 a barrel at 11:48 a.m. EST (15:48 GMT). Front-month prices, which touched their highest since October 2018 at USD85.10, were headed for a weekly rise of 3%, which would be their sixth straight weekly gain.

US West Texas Intermediate (WTI) crude futures rose 87 cents, or 1.1%, to USD82.19 a barrel. The contract is heading for a 3.5% gain on the week, up for the eighth consecutive week.

Demand has picked up with the recovery from the COVID-19 pandemic, with a further boost from power generators who have been turning away from expensive gas and coal to fuel oil and diesel.

The White House said it will lift COVID-19 travel restrictions for fully vaccinated foreign nationals effective Nov. 8, which should boost jet fuel demand.

Meanwhile, a sharp drop in OECD and US oil stockpiles is expected to keep global supply tight.

The International Energy Agency on Thursday said the energy crunch is expected to boost oil demand by 500,000 barrels per day (bpd). That would result in a supply gap of around 700,000 bpd through the end of this year, until the Organization of the Petroleum Countries and allies, together called OPEC+, add more supply, as planned in January.

As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.

We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.

We also 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.

Mitsubishi to invest USD17.5 blm by 2030 to drive decarbonisation and cut emissions

Mitsubishi to invest USD17.5 blm by 2030 to drive decarbonisation and cut emissions

MOSCOW (MRC) -- Japan's Mitsubishi Corp will invest 2 trillion yen (USD17.54 B) by 2030 in alternative energies such as renewables and hydrogen to drive its decarbonization efforts and cut emissions, reported Reuters with reference to the company's statement on Monday.

Mitsubishi, a trading house and mineral resources company with energy and metals assets worldwide, aims to halve its greenhouse gas emissions by 2030 on 2020 levels, and to achieve net zero emissions by 2050, it said in a statement.

The move comes as oil and coal producers and consumers worldwide accelerate a move away from fossil fuels by investing in cleaner energy and developing technology to eliminate climate-warming gases.

Of Mitsubishi's 2 trillion yen budget, about half will be spent on expanding its renewable energy assets, mainly wind power, while the rest will go to hydrogen and ammonia, liquefied natural gas (LNG) and metals used in electrification and batteries.

The Japanese company will keep investing in LNG as it believes it will play an important role as a transitional energy, but plans to use carbon capture and storage and other technology to cut CO2 emissions in the LNG supply chain.

As MRC informed earlier, in September 2021, Mitsubishi Corp and Shell Canada Products, by its managing partner, Shell Canada Limited (Shell Canada), signed a Memorandum of Understanding (MoU) relating to the production of low-carbon hydrogen through the use of carbon capture and storage (CCS) near Edmonton, Canada. Mitsubishi Corp said it aims to build and start-up the low-carbon hydrogen facility near the Shell Energy and Chemicals Park Scotford towards the latter half of this decade, and Shell would provide CO2 storage via the proposed Polaris CCS project. The low-carbon hydrogen, commonly called blue hydrogen, would be produced via a natural gas feedstock and exported mainly to the Japanese market to produce clean energy.

We remind that Royal Dutch Shell plans to reduce its refining and chemicals portfolio by more than half, it said in July 2020 without giving a precise timeframe. The move is part of the Anglo-Dutch company's plan to shrink its oil and gas business and expand its renewables and power division to reduce greenhouse gas emissions sharply by 2050.

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 1,396,960 tonnes in January-July 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of statistical copolymers of propylene (PP random copolymers) subsided.

Mitsubishi Chemical with headquarters in Tokyo, Japan, is a diversified chemical company involved in petrochemicals, polymers, agrochemicals, speciality chemicals and pharmaceuticals. The company's main focus is on three business pillars: petrochemicals, performance and functional products, and health care.

Ukraine canceled the introduction of duties on the import of cables into the country

MOSCOW (MRC) - The Interdepartmental Commission on International Trade of Ukraine has canceled the introduction of a special duty on the import of cables into the country, Uryadovy courier reports.

"Based on the results of the above-mentioned revision, the commission established that national interests do not require the use of special measures and made a decision on October 11, by which it decided to cancel the decision on the application of special measures regarding the import of wires into Ukraine," the commission noted.

The decision on cancellation comes into force from the date of publication, that is, from 13 October. Not all types of cabling and wiring products are produced in Ukraine, or they are not produced on an industrial scale. The application of the import duty could lead to an increase in the delivery time of products, limit the access of market participants to the required range of goods and affect the choice, in particular, on such criteria as price and quality.

The introduction of the duty could negatively affect the development of the communication infrastructure of Ukraine. The price of the Internet for users could rise.

Earlier it was reported that the Interdepartmental Commission on International Trade (ICMT) on April 23, 2021 introduced a special duty for three years on the import of wires to Ukraine, regardless of the country of origin: in the first year of operation - 23.5%, in the second - 22.3% and in the third - 21.2%.

The investigation was initiated on July 28, 2020 at the initiative of the Odesskabel and Yuzhkabel factories (together they produce over 50% of these products in Ukraine) in relation to the import of insulated wires, cables and other insulated electrical conductors to Ukraine, as well as fiber-optic cables.

We are talking about commodity codes according to UKTVED 8544 49 20 00, 8544 49 91 00, 8544 60 10 10 8544 60 10 98, 8544 60 90 10 8544 60 90 90, 8544 70 00 10 8544 70 00 90.

During the investigation period - from the beginning of 2017 to mid-2020 - import volumes increased by 128.8%, the share of imports in total production - by 180.4%, in consumption - by 74.8%.

According to MRC's DatasScope report, last month's SPVC imports to the Ukrainian market decreased to 2,300 tonnes from 2,700 tonnes in August, Ukrainian companies reduced their shipments of polymer from the USA. Overall SPVC imports reached 20,800 tonnes in January-September 2021, compared to 26,800 tonnes a year earlier. Limited export quotas of European and North American producers were the main reason for such a major fall in imports.

Lukoil and Gazprom Neft intend to develop production of reagents and surfactants

Lukoil and Gazprom Neft intend to develop production of reagents and surfactants

MOSCOW (MRC) -- Lukoil and Gazprom Neft concluded an agreement on cooperation in implementation of oil recovery enhancement projects, said the company.

The agreement provides for joint work on improving chemical methods of enhanced oil recovery. It will lay the foundation for best practices exchange and collaboration in lab research, as well as for studies of surface-active agents and production stimulation chemicals.

The companies plan to join their efforts to develop national production of chemical agents and equipment for manufacturing of surfactant-polymer and polymer solutions for oil recovery enhancement. They also aim to test and introduce new chemical compounds when developing mature reserves at their fields?

Lukoil and Gazprom Neft will also evaluate prospects for creation of competence centres that would apply innovative equipment to select surfactant and polymer formulae.

Earlier it was reported that Gazprom Neft and Lukoil are creating a joint venture (JV) based on Meretoyakhaneftegaz to develop a large oil and gas cluster in the Yamalo-Nenets Autonomous Okrug.

According to the ICIS-MRC Price Report, Stavrolen, a subsidiary of Lukoil, has begun a sequential shutdown to repair its high-density polyethylene (HDPE) production facilities. The turnaround will be quite long and will take about 36 days. The annual production capacity is 300,000 tonnes.

Lukoil is the second largest oil company in Russia (the leader is Rosneft). It accounts for 2% of world oil production and 1% of world proven reserves, according to the company's website. According to the Moscow Exchange as of March 11, Lukoil has surpassed Rosneft in terms of capitalization.

Gazprom Neft (headquartered in St. Petersburg, part of Gazprom, which owns 95.68% of the shares) is one of the largest Russian oil companies.

COVID-19 - News digest as of 18.10.2021

1. Asian refinery margins back to pre-COVID levels due to doubling of gasoil profits

MOSCOW (MRC) -- Asian oil refiners' margins have rallied back to their highest since before the COVID-19 pandemic struck, spurred by a doubling of gasoil profits as the global economic recovery and power shortage drive demand for the fuel, according to Hydrocarbonprocessing with reference to analysts and traders' statement. Gasoil demand has surged as power generators seek alternatives to record-high natural gas and coal and as industrial consumption has climbed while economies reopen from COVID-19 restrictions. That has pushed the gasoil profit margin nearly 60% higher in the past month, replacing gasoline as the key component of overall refinery profits. The Singapore complex refining margin, a proxy for Asian refiners' profitability, jumped to more than USD7 a barrel earlier this month, the highest since September 2019.