Crude oil prices down on surging cases of Omicron and fears that restrictions may affect fuel demand

MOSCOW (MRC) -- Oil prices fell on Friday and were also down on the week as surging cases of the Omicron coronavirus variant raised fears that new restrictions may hit fuel demand, reported Reuters.

"There are concerns about COVID that won't go away, and the perception that could weigh on demand is putting pressure on the market," said Bob Yawger, director of energy futures at Mizuho in New York.

Brent crude futures settled down USD1.50, or 2%, at USD73.52 a barrel, while US West Texas Intermediate (WTI) crude dropped USD1.52, or 2.1%, tosettle at USD70.86 a barrel. Brent was down 2.6% on the week and WTI fell 1.3%.

In Denmark, South Africa and Britain, the number of new Omicron cases has been doubling every two days. Danish Prime Minister Mette Frederiksen said on Friday her government would propose new restrictions to limit the spread.

In the United States, the rapid spread of the Omicron variant has led some companies to pause plans to get workers back into offices.

"Messages of caution and warnings of a worsening COVID wave are starting to ring louder with the approach of the year-end holiday season, dampening market sentiment," said Vandana Hari, energy analyst at Vanda Insights. "Crude may remain in a holding pattern, albeit with plenty of price volatility around the mean, in holiday-thinned trading over the next couple of weeks."

The Organization of the Petroleum Exporting Countries, Russia and allies, together known as OPEC+, have said they could meet before their scheduled Jan. 4 meeting if changes in the demand outlook warrant a review of their plans to add 400,000 barrels per day of supply in January.

"We could see further consolidation around USD70 in the coming sessions as we learn more about Omicron, what restrictions it will bring, and whether OPEC+ will react," said Craig Erlam, senior market analyst at OANDA.

The US oil rig count, a leading indicator of output, rose in the week, prompting concerns of potential oversupply. The oil and gas rig count, an early indicator of future output, rose by three to 579 in the week to Dec. 17, energy services firm Baker Hughes Co said in its closely followed report on Friday.

But despite the Omicron threats to demand, Goldman Sachs said on Friday the new variant has had limited impact on mobility or oil demand, adding that it expected oil consumption to hit record highs in 2022 and 2023.

Oil prices have retreated from multi-year highs earlier in the fourth quarter on improved supplies.

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, EIA said in a monthly report earlier this year, a smaller decline than its previous forecast for a drop of 210,000 bpd.
MRC

MOSCOW (MRC) -- Materials science company Dow has announced that five of its largest manufacturing sites have received International Sustainability & Carbon Certification (ISCC) Plus recognition for their compliance with tracking of sustainable feedstocks use, said Canplastics.

The sites certified are Freeport, Texas; Tarragona, Spain; Terneuzen, the Netherlands; Boehlen, Germany; and Schkopau, Germany.

ISCC is a globally applicable sustainability certification system that covers all sustainable feedstocks, including circular feedstocks produced from plastic scrap as well as biobased renewables sourced from agriculture and forestry biomass or waste products. According to a Dow news release, this certification recognizes the company’s implementation of environmentally, socially and economically sustainable production requirements, which was awarded following an independent, external audit to ensure product supply chains are fully traceable and that Dow and its suppliers adhere to and accelerate sustainable practices.

"This third-party validation is a critical step in our sustainability journey to design and produce fully circular products,” said Nestor de Mattos, Dow’s North America commercial vice president for packaging and specialty plastics. “Our intent is to help our customers reach their circularity targets by providing 100 per cent recyclable solutions and offering products made with recycled content."

According to Dow, these certifications will help the company to meet its sustainability goals, including reaching a target to stop waste by enabling one million metric tons of plastic scrap to be collected, reused or recycled by 2030; and to close the loop on plastic scrap by enabling 100 per cent of Dow products sold into packaging applications to be reusable or recyclable by 2035.

As per MRC, Dow has no plans to pursue any major mergers and acquisitions anytime soon, although the company is open to deals that could be valued in the millions.

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 2,047,100 tonnes in the first ten months of 2021, up by 17% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,226,530 tonnes in January-October 2021, up by 26% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding stat-copolymers of propylene (PP random copolymers) decreased significantly.

Dow Chemical is an American diversified chemical company headquartered in Midland, Michigan. It is a major manufacturer of polymer products, including polystyrene, polyurethane, polyethylene, polypropylene and synthetic rubbers. The company produces more than five thousand products at 188 production facilities in 37 countries.
MRC

MOSCOW (MRC) - The Industrial Development Fund (IDF) of Russia financed 1.2 billion rubles. in the Polief project - the production of polyethylene terephthalate (PET) from recycled materials, the press service of the government of Bashkiria reports, said the company.

"Last year, the implementation of an investment project for the production of PET began with an investment volume of more than 3.4 billion rubles. An additional 37 jobs will be created in the production," said Alexander Sheldyaev, Minister of Industry, Energy and Innovation of Bashkiria.

The implementation of the project will make it possible to produce 144,500 tonnes of PET chips with a content of up to 23.5% of recycled polymer per year and to increase the total production volume on one PET line by 33,500 tonnes per year.

Earlier it was reported that Polief continues to implement the project to launch the production of "green" PET pellets containing secondary raw materials. The enterprise loaded the first pile into the base of the production foundation. It is planned to launch the line in the first half of 2022. The production of PET with recycled content is an important part of SIBUR's sustainable development strategy until 2025. The technology that is planned to be used at Polief is environmentally friendly and belongs to the advanced methods of involving recycled PET in the production cycle.

According to MRC's ScanPlast, the estimated PET consumption in Russia in October of this year increased by 17% compared to the previous year and amounted to 67,970 tonnes against 58,030 tonnes in October 2020. According to the results of ten months of 2021, 661.83 thousand tons of PET were processed in the Russian Federation, which is 13% more than the same indicator last year.

Polyef is the largest producer of terephthalic acid (TPA) and polyethylene terephthalate (PET) in Russia (raw material for polymer food packaging). The TPA production capacity is 350 thousand tons per year, PET - 219 thousand tons SIBUR owns 100% of the company's shares.

PJSC SIBUR Holding is the largest petrochemical company in Russia and Eastern Europe with full coverage of the industry cycle from gas processing, production of monomers, plastics and synthetic rubbers to plastics processing.
MRC

MOSCOW (MRC) -- Cambridge, Ont.-based recycling compounder Canuck Compounders Inc. has been acquired by graphene supplier NanoXplore Inc., of Montreal, for USD9.3 million, said Canplastics.

Canuck Compounders provides sustainable and engineered recycled plastic compounds for use in transportation, building and construction, agriculture and packaging markets. The company’s Cambridge manufacturing facility has a production capacity of approximately 40 million pounds annually.

In a Dec. 16 news release, NanoXplore CEO Soroush Nazarpour described the acquisition as being “strategically aligned with our growth initiatives and significantly increases our graphene compounding capability, especially in recycled plastics."

Canuck Compounders has a “strong relationship with recycled plastic suppliers” that ensures a smooth and reliable supply of post-consumer and post-industrial recycled plastics, Nazarpour continued. “This transaction will enhance our technical expertise in recycled plastic compounds and bolster our top-line by approximately USD20 million annually, without considering revenues derived from graphene inclusion,” he said.

Officials with NanoXplore added that the firm is seeking to expand its downstream, value-added product offering through enhanced masterbatch and compounds, pastes, battery materials, formulated thermoset resins and cement admixtures. Canuck Compounders founder and CEO William Dickinson will continue in a role as general manager, the news release said, along with about 40 employees.

As it was written earlier, Marieville, Que.-based PVC compounder Reinier Plastics Inc. has been acquired by Aurora Plastics LLC, a supplier of PVC compounds headquartered in Streetsboro, Ohio. The terms of the deal have not been disclosed.

Optima Colour, a Cambridge, Ont.-based thermoplastic compounder, has been acquired by a group of purchasers headed by industry veteran Kurt Stahle, the owner of material supplier Simcoe Plastics Ltd. The terms of the deal have not been disclosed.
MRC

MOSCOW (MRC) -- Royal Dutch Shell on Thursday confirmed a Reuters report that the sale of its controlling interest in a Texas refinery to Mexican state oil company Petroleos Mexicanos has been delayed until next year, reported Reuters.

A review of the deal by the Committee on Foreign Investment in the United States, an national security group chaired by the US Treasury, had been expected to wrap up this month but has been extended into next year, Shell spokesperson Curtis Smith said.

Shell in May disclosed an agreement to sell its 50% interest in the 302,800-barrel-per-day (bpd) Deer Park, Texas, refinery outside Houston to partner Pemex for about $596 million. The closing was expected this month, officials have said.

“We were hopeful we could conclude the sale before the end of the month, however, it now looks like the full amount of time will be needed,” Smith said. “We will continue to cooperate with CFIUS as they review the transaction.”

Pemex was not immediately available to comment.

The delay signals CFIUS has moved past its initial 45-day review and into a second, investigative period. The committee is charged with reviewing sales of critical US infrastructure to foreign buyers for national security implications.

The second phase does not signal a potential rejection by the security group. Questions raised during the inital review can be resolved with a letter of agreement or a mitigation agreement, according to a former CFIUS official not involved in the Pemex review.

As MRC informed previously, Royal Dutch Shell plc. said in November that its petrochemical complex of several billion dollars in Western Pennsylvania is about 70% complete and in the process to enter service in the early 2020s. The plant's costs are estimated to be USD6-USD10 billion, where ethane will be transformed into plastic feedstock. The facility is equipped to produce 1.5 million metric tons per year (mmty) of ethylene and 1.6 mmty of polyethylene (PE), two important constituents of plastics.

Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,047,100 tonnes in the first ten months of 2021, up by 17% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,226,530 tonnes in January-October 2021, up by 26% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding stat-copolymers of propylene (PP random copolymers) decreased significantly.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC