Crude oil prices rise to almost USD84 as Omicron variant impact expected to be short-lived

Crude oil prices rise to almost USD84 as Omicron variant impact expected to be short-lived

MOSCOW (MRC) -- Oil rose to nearly USD84 a barrel on Tuesday, supported by tight supply and expectations that rising coronavirus cases and the spread of the Omicron variant will not derail a global demand recovery, reported Reuters.

A lack of capacity in some countries has meant that supply additions by the Organization of the Petroleum Exporting Countries (OPEC) are running below the increase permitted under a pact with its allies.

On the demand side, Federal Reserve Chair Jerome Powell said on Tuesday he expects the economic impact of Omicron to be short-lived, adding that ensuing quarters could be very positive for the economy after the surge driven by the variant subsides.

Brent crude gained USD2.85, or 3.52%, to USD83.72 a barrel, its highest price since early November, after having lost 1% in the previous session.

US West Texas Intermediate (WTI) rose USD2.99, or 3.8%, to USD81.22, also its highest price since mid-November. On Monday, it fell 0.8%.

"Combination of facts - that demand is going to be stronger than anticipated and that OPEC's supply may not grow as fast as the demand - is why prices are climbing," said Phil Flynn, senior analyst at Price Futures Group.

Major economies have avoided a return to severe lockdowns, even as COVID-19 infections have soared. European jet fuel refining margins, for example, are back to pre-pandemic levels as supplies in the region tighten and global aviation activity recovers despite the spread of Omicron.

"Omicron has yet to wreak the havoc of the Delta variant and may never do so, keeping the global recovery on track," said Jeffrey Halley, analyst at brokerage OANDA.

The US government on Tuesday also estimated that US oil output would be lower this year than previously expected, while total oil demand would be higher than earlier forecast.

Production is estimated to rise by 640,000 barrels per day this year, lower than the previous month's forecast of a 670,000 bpd rise, and expected to increase by another 610,000 bpd in 2023.

Total oil demand is now expected to rise by 840,000 bpd for the year, higher than the 700,000-bpd increase expected last month. It is estimated to rise by another 330,000 bpd in 2023.

Brent rose by 50% in 2021 and has rallied further in 2022, with investors expecting increasing demand while OPEC and its allies, collectively known as OPEC+, slowly ease record output cuts made in 2020.

Recent outages in Libya have also buoyed prices, and the National Oil Corp said on Tuesday it was suspending exports from the Es Sider terminal. A weaker US dollar also helped to support oil because it makes oil cheaper for buyers holding other currencies and tends to reflect higher risk appetite among investors.

Upcoming reports on US inventories are expected to show crude stockpiles fell by about 2 million barrels.

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 last year, a smaller decline than its previous forecast for a drop of 210,000 bpd.
MRC

ExxonMobil Q4 2021 earnings poised to exceed pre-pandemic level

ExxonMobil Q4 2021 earnings poised to exceed pre-pandemic level

MOSCOW (MRC) -- ExxonMobil's fourth quarter profit should top Wall Street's consensus and surpass its pre-pandemic levels, lifted by better-than-expected earnings from oil and gas, reported Reuters with reference to analysts.

Credit Suisse, Scotiabank and JPMorgan have raised their fourth quarter earnings estimates following Exxon's flagging of sharply higher oil and gas operating profit last week. Official results are due on Feb. 1.

The higher earnings outlooks lifted Exxon shares 3.8% on Monday to USD63.51 on top of Friday's less than 1% gain. The stock rose 48% last year but remains below where it traded two years ago.

In 2020, the largest US oil producer suffered a historic USD22.4 B loss from falling oil prices and lower refining margins. Cost cuts and energy price hikes allowed it to pay down debt and plot a share buyback program this year.

An Exxon securities filing signaled quarterly results "above the midpoint" of prior guidance and "well above pre-pandemic levels," Credit Suisse analyst Manav Gupta wrote in a note on Friday.

The company could earn USD8.2 B, or USD1.93 per share, according to the mid-point average estimate of the three banks that have updated their estimates, excluding one-time items. That is above analysts' adjusted profit of USD1.79 per share as tallied by Refinitiv IBES.

As MRC wrote before, Exxon also signaled mark-to-market gains of up to USD1.1 B for oil and gas and refined products. Proceeds from asset sales including its U.K. North Sea assets could deliver up to USD500 MM, according to a Securities and Exchange Commission filing.

We remind that ExxonMobil said on Dec. 27, its Baytown, Texas, refinery continued to operate at reduced rates following a fire on Dec. 23, and that the unit involved remained shut down. The company has not yet determined the cause of the fire, but said it was continuing to empty the unit so it could safely enter the facility and assess what impact it would have on production. A filing with the Texas Commission on Environmental Quality said the fire occurred at the facility's hydro desulfurization unit 1.

Exxon's Baytown facility is home to a chemical plant, an olefins plant and the country's fourth-biggest oil refinery, with capacity to process 560,500 bpd of crude.

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 2,265,290 tonnes in the first eleven months of 2021, up by 14% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,363,850 tonnes in January-November, 2021, up by 25% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding PP random copolymers decreased significantly.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.
MRC

ExxonMobil rejects USW modified proposal in Texas refinery lockout

ExxonMobil rejects USW modified proposal in Texas refinery lockout

MOSCOW (MRC) -- ExxonMobil on Thursday rejected a proposal by the United Steelworkers union (USW) to end an eight-month lockout of about 600 workers at the company’s Beaumont, Texas, refinery, reported Reuters with reference to the company's statement.

The union's proposed modifications to contract language do not meet the company's goals and would increase costs, Exxon said. The company told the union "we remain far apart," it said on its Embeaumont.com website.

The two sides met for about an hour on Thursday in their first negotiating session since late October, said Bryan Gross, USW international representative.

As MRC informed before, ExxonMobil said on Dec. 27, its Baytown, Texas, refinery continued to operate at reduced rates following a fire on Dec. 23, and that the unit involved remained shut down. The company has not yet determined the cause of the fire, but said it was continuing to empty the unit so it could safely enter the facility and assess what impact it would have on production. A filing with the Texas Commission on Environmental Quality said the fire occurred at the facility's hydro desulfurization unit 1.

Exxon's Baytown facility is home to a chemical plant, an olefins plant and the country's fourth-biggest oil refinery, with capacity to process 560,500 bpd of crude.

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 2,265,290 tonnes in the first eleven months of 2021, up by 14% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,363,850 tonnes in January-November, 2021, up by 25% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding PP random copolymers decreased significantly.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.
MRC

Trinseo raises January prices for PC/ABS grades and MAGNUM ABS in Europe

Trinseo raises January prices for PC/ABS grades and MAGNUM ABS in Europe

MOSCOW (MRC) -- Trinseo, a global materials company and manufacturer of plastics, latex binders, and synthetic rubber, and its affiliate companies in Europe, have announced a price increase for all PULSE polycarbonate (PC)/ acrylonitrile-butadiene-styrene (ABS) and for all MAGNUM ABS automotive market products in Europe, according to the company's press release.

Effective January 1, 2022, or as existing contract terms allow, the contract and spot prices for the products stated above rose by EUR200 per metric ton.

As MRC reported earlier, Trinseo last raised its prices for all PULSE PC/ABS grades in the EMEA region on November 1, 2021 by EUR300 per metric ton.

According to MRC's ScanPlast report, Russia's estimated consumption of PC granules (excluding imports and exports to/from Belarus) decreased in the first eleven months of 2021 by 11% year on year due to a major fall of imports and higher exports. Thus, overall estimated consumption in Russia totalled 74,300 tonnes in January-November 2021 versus 83,600 tonnes a year earlier.

Trinseo is a global materials company and manufacturer of plastics, latex and rubber. Trinseo's technology is used by customers in industries such as home appliances, automotive, building & construction, carpet, consumer electronics, consumer goods, electrical & lighting, medical, packaging, paper & paperboard, rubber goods and tires. Formerly known as Styron, Trinseo completed its renaming process in 1Q 2015. Trinseo had approximately USD3.0 billion in net sales in 2020, with 17 manufacturing sites around the world, and approximately 2,600 employees.
MRC

COVID-19 - News digest as of 11.01.2022

1. Petronas releases its annual activity outlook for 2022–2024 that provides insights into industry trends

MOSCOW (MRC) -- Malaysian state-owned energy giant Petroliam Nasional Berhad, or Petronas, has released its annual activity outlook for 2022-2024, which provides insights into industry trends, demand outlook and the upcoming activities of the company’s upstream, gas + new energy and downstream businesses, as per the company's press release. For 2022, Petronas anticipates the path towards sustained demand recovery to remain fragile and uncertain as the oil market adjusts to both short and long-term landscapes, driven by the resumption of economic activities amidst the COVID-19 pandemic.

MRC