Russia's seaborne diesel exports drop 21% in May

MRC) -- Russia's seaborne diesel and gasoil exports were 21% lower in May from a month earlier at about 3.1 million tons as seasonal refinery maintenance cut supply and domestic demand rose, data from traders and Refinitiv Eikon showed, said Reuters.

Idle primary oil refining capacity for May has been revised up by 500,000 tons from the previous plan to 5.0 million tons as several refineries extended maintenance. Since the full EU embargo on Russian oil products took effect on Feb. 5, traders have diverted diesel exports from Russian ports to countries in Africa, Asia and the Middle East. Previously Europe was the main buyer.

According to Refinitiv data, Russian origin diesel sent to Turkey slipped to 0.9 million tons in May from 1.2 million tons in April. The port of discharge had yet to be confirmed for around half the cargoes. One trader said some Russian diesel would be involved in ship-to-ship transfer near the Turkish port of Mersin.

Last month, nearly 0.43 million tons of the diesel that loaded in Russian Baltic ports was heading to Brazil, Refinitiv data showed. Together, Turkey and Brazil have been the main destinations for diesel exported from Russian ports this year. From January-to-May, Turkey received 5.2 million tons and Brazil 1.6 million tons, compared with respectively 5 million tons and 74,000 tons for the whole 2022, the Refinitiv data showed.

Russian diesel exports to African countries totaled about 0.5 million tons in May after 0.9 million tons in April, with Togo, Libya and Tunisia the top importers, according to the data. Another 325,000 tons of diesel from Russia were in May destined for STS loadings near the Greek port of Kalamata, Refinitiv data shows. The final destinations were mostly unknown, but traders said they expected them to be in Asia or the Middle East.

In March, Russia sent diesel via STS near Kalamata to Saudi Arabia in addition to direct supplies. According to Refinitiv shipping data, diesel loadings from Russian ports to Saudi Arabia totaled about 95,000 tons in May after 383,400 tons the previous month, with another 170,000 tons heading to Fujairah, the major transit and blending hub for oil products in the United Arab Emirates.

All the shipping data above are based on the date of cargo departure. About 200,000 tons of diesel loaded in Russian ports in May do not yet have a confirmed destination.

We remind, Russia's Lukoil has increased oil production at Iraq's southern West Qurna 2 oilfield by 80,000 barrels per day (bpd) to a total of 480,000 bpd, an oil official told Reuters on Thursday. Production rose after the completion of the connection of 47 new oil wells which boosted production, an Iraqi oilfield official said, adding that output could reach 500,000 bpd in a short period of time if required. The increase in Iraq's production comes as Turkey continues to halt Iraq's 450,000 bpd of northern exports through the Iraq-Turkey pipeline.

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Oil prices rose about 2% on Friday after the U.S. Congress passed a debt ceiling deal that averted a government default in the world's biggest oil consumer and jobs data fed hopes for a possible pause in interest rate hikes ahead of a meeting of OPEC and its allies this weekend, said Reuters.

Brent futures rose USD1.36, or 1.8%, to USD75.64 a barrel by 11:46 a.m. EDT (1546 GMT). U.S. West Texas Intermediate (WTI) crude rose USD1.28, or 1.85, to USD71.38.

WTI was headed for its highest close since May 26 and Brent on track for its highest close since May 29. For the week, both contracts were down about 2%, headed for their first weekly losses in three weeks. Open interest in futures contracts rose on Thursday to the highest since July 2021 for Brent and March 2022 for WTI.

The U.S. Senate approved a bipartisan deal to suspend the limit on the U.S. government's USD31.4 billion debt ceiling, staving off a sovereign default that would have rocked financial markets. U.S. employment increased more than expected in May, but a moderation in wages could allow the U.S. Federal Reserve to skip an interest rate hike this month for the first time in more than a year. Higher interest rates can slow the economy and reduce oil demand.

Oil traders have turned their attention to the June 4 meeting of OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia. The group in April announced a surprise cut of 1.16 million barrels per day, but price gains from that move have been erased with crude trading below pre-cut levels. Sources told Reuters OPEC+ was unlikely to announce fresh output cuts.

"While there seems to be a widely held view that (OPEC+) won't announce any further cuts, it's worth noting that the same was true at the last meeting and then the group announced cuts of roughly another million barrels," said Craig Erlam, senior market analyst at OANDA.

"It's hard to ignore the warnings from the Saudi energy minister to 'watch out', threatening more "ouching" for short speculators," Erlam noted. "This may be playing into the mind of traders fearing another surge on the open next week."

Saudi Arabia is the biggest producer in OPEC. On the demand side, manufacturing data out of China, the world's second biggest oil consumer, painted a mixed picture.

China is suffering from early heatwaves, expected to persist through June, putting power grids under strain as consumers in mega-cities like Shanghai and Shenzhen crank up air conditioners.

We remind, Europe's largest economy is also one of the region's most aggressive advocates for shifting energy systems away from fossil fuels, and leads the continent in emissions reduction targets and investments in renewable energy supplies.

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Technip Energies, LyondellBasell and Chevron Phillips Chemical announced the signing of a Memorandum of Understanding for the design, construction and operation of a demonstration unit for Technip Energies’ electric steam cracking furnace technology to produce olefins, said Hydrocarbonprocessing.

The demonstration unit will be located at LyondellBasell’s site in Channelview, Texas, USA, and is designed to prove the technology at industrial scale. Steam cracking furnaces play a significant role in the production of basic chemicals by breaking down hydrocarbons into olefins and aromatics. This cracking process requires a temperature of more than 1,500°F (850°C).

Technip Energies, a leader in the ethylene market, developed the concept and design for the e.Furnace by T.EN technology, which could achieve this temperature using electricity as the heat source. The use of renewable electricity in this process would contribute to significantly reducing GHG emissions associated with olefins production.

Arnaud Pieton, CEO of Technip Energies, stated: “We are delighted to team up with LyondellBasell and CPChem to bring the eFurnace by T.EN to fruition. Consistent with our purpose to engineer a much-needed sustainable future Technip Energies is making huge strides toward reducing the CO2 emissions resulting from the production of ethylene and this design will enable olefins producers to take advantage of the growing supply of available renewable energy to operate the most energy-intensive part of the plant."

Peter Vanacker, CEO of LyondellBasell, said: “We are taking decisive steps toward reducing our absolute scope 1 and 2 greenhouse gas emissions, while creating solutions for everyday sustainable living. Deployment of an industrial-scale electric cracking furnace is one option we are considering in this space because of its ability to reduce furnace GHG emissions by up to 90% compared to a conventional furnace. Our Channelview site has the infrastructure, and our people have the expertise to test this advanced furnace technology and help our industry accelerate climate action.”

Bruce Chinn, President and CEO of Chevron Phillips Chemical, said: “Climate change is a global issue that will take action from all segments of society, and we want to be part of the solution by reducing the intensity of our carbon footprint. This project supports our efforts toward lowering the carbon intensity of our operations and demonstrates our continued focus on accelerating change for a sustainable future.”

We remind, Technip Energies is pleased to announce that a joint venture, led by Technip Energies in partnership with Consolidated Contractors Company, has won a major Engineering, Procurement, Construction and Commissioning contract by QatarEnergy for the onshore facilities of the North Field South Project.

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Oil steadied on Thursday as a potential pause in U.S. interest rate hikes and the passing of a crucial vote on the U.S. debt ceiling bill were offset by a report of rising inventories in the world's biggest oil consumer, said Hydrocarbonprocessing.

U.S. Federal Reserve officials on Wednesday suggested interest rates could be kept on hold this month and the U.S. House of Representatives passed a bill suspending the government's debt ceiling, improving the chance of averting a disastrous default.

Brent crude futures fell 10 cents, or 0.14%, to USD72.50 a barrel by 1339 GMT while U.S. West Texas Intermediate crude (WTI) rose 7 cents, or 0.1%, to $68.16. Both benchmarks fell on Tuesday and Wednesday. "Oil markets may have been oversold in the last two trading days," said CMC Markets analyst Tina Teng. "Sentiment rebounded amid the debt bill's passage in the House and (the) Fed's rate hike pause signal."

Mixed demand indications from China, the world's biggest oil importer, have nonetheless weighed on the market, as has industry data showing a rise in U.S. crude inventories. Market sources citing American Petroleum Institute (API) figures on Wednesday said that U.S. crude inventories rose by about 5.2 million barrels last week. Government stocks data is due at 1430 GMT on Thursday.

"The current mood is one of pessimism," said Tamas Varga of oil broker PVM. "Investors have been pragmatic and risk averse of late." Also in focus is the June 4 meeting of the OPEC+ producer group, in which the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia will discuss whether or not to cut oil production further.

Four sources from the alliance told Reuters that OPEC+ is unlikely to deepen supply cuts at their ministerial meeting on Sunday despite a fall in oil prices toward USD70 a barrel. These price levels are "not at all comfortable" for OPEC+ members, said Ole Hansen, head of commodity strategy at Saxo Bank.

"Failure to deliver some price supportive action at the OPEC+ meeting this weekend could see oil prices drop further, but overall, we see the downside risk as limited with last month's production cuts yet to be fully felt and priced in," Hansen said.

We remind, Russia is leaning towards leaving oil production volumes unchanged ahead of an OPEC+ policy meeting on June 4 because Moscow is content with current prices and output. OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other allies, surprised the market on April 2 with further output cuts that pushed up the price of oil.


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