MOSCOW (MRC) -- Crude oil futures continued its upward trajectory during mid-morning trade in Europe on Oct. 25 as supply sentiment remains firm while OPEC+ holds steady on crude oil production rises, reported S&P Global.
At 11:44 AM (1044 GMT) London time, the ICE December Brent futures contract was USD0.61/b (0.71%) higher from the previous close at USD86.14/b, while the NYMEX December light sweet crude contract was USD0.73/b (0.87%) higher at USD84.49/b.
"Comments from the Saudi energy minister which suggests that OPEC+ will continue to take a cautious approach in increasing output is likely providing some support to the market, particularly with other members of OPEC+ echoing the Saudi view," analyst from ING said Oct. 25.
Demand recovery from impacts of COVID-19 coupled with a conservative approach from the OPEC+ alliance to raise its crude oil production has been providing support to the complex lately.
The supply tightness is being further exacerbated by the inability of some OPEC+ countries to raise production quickly to match monthly increments in quotas.
Market participants are now gearing up for the next OPEC+ meeting scheduled for Nov. 4, where the alliance is expected to review production decisions for December.
Concerns over resurging rates of COVID-19 as many countries head into the winter months - a time when flu infection rates usually rise - have been subsided for now.
"For now, the market does not appear concerned about the COVID-19 outbreak in a number of provinces in China. China has, however, demonstrated multiple times that it is able to get outbreaks under control fairly quickly," they said.
As MRC wrote previously, China's September crude oil throughput extended its downtrend to dip 0.7% from August to a 17-month low of 13.7 million b/d amid a slow down in the economy and product destocking activity. The country's crude throughput was last lower at 13.16 million b/d in April 2020.
Meanwhile, China's crude oil imports fell 4.7% on the month to 10.03 million b/d in September, according to the latest data from the General Administration of Customs, or GAC, on Oct. 13. The reduction indicated weak momentum for imports for the rest of the year, analysts said.
We remind that China's oil consumption is likely to peak around 2026 at about 16 million barrels per day and that of natural gas by around 2040, said a top executive of Sinopec Corp. in September 2021.
We also remind that in August 2021, China Petroleum and Chemical Corp, also known as Sinopec, the world's petrochemical major, launched the first phase of the Gulei refining complex in Zhangzhou city in China’s southeastern Fujian province. The refining complex, a 50:50 joint venture between Sinopec’s Fujian Petrochemical Company Ltd and Taiwan Xuteng Investment Company Ltd, invested 27.8 billion yuan (USD4.28 billion) in the first phase. That will result in an 800,000 tonnes per annum ethylene plant, a 600,000 tonnes per annum styrene unit and seven other downstream petrochemical units, Sinopec said.
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 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.