Oil edges up on U.S. crude stockpile draw, hurricane jitters

MOSCOW (MRC) -- Oil prices extended gains on Wednesday after U.S. government data showed tighter-than-expected crude supplies in the world's biggest fuel consumer, while a hurricane in the Gulf of Mexico kept investors on edge, said Hydrocarbonprocessing.

Brent crude futures for October rose 21 cents to USD85.70 a barrel by 1108 a.m. EDT (1508 GMT). The October contract expires on Thursday and the more active November contract was at USD85.13, up 22 cents. U.S. West Texas Intermediate crude futures rose 30 cents to USD81.46.

Both benchmarks rallied by more than a dollar on Tuesday as the U.S. currency weakened after soft U.S. jobs data reduced the likelihood of further increases to interest rates. U.S. crude inventories fell by 10.6 million barrels in the last week to 422.9 million barrels, Energy Information Administration data showed on Wednesday. Analysts in a Reuters poll expected a 3.3 million-barrel drop.

Product supplied of finished motor gasoline - a proxy for demand - was at about 9.1 million barrels per day. "I would expect (gasoline demand) to fall precipitously from here," said John Kilduff, a partner at Again Capital, as gasoline demand typically peaks in the summer driving season.

Investors also had an eye on Hurricane Idalia, which came ashore as a Category 3 storm on Wednesday morning in a Florida region where the state's northern panhandle curves into the Florida Peninsula.

The hurricane had moved over the Gulf of Mexico to the east of major U.S. oil and natural gas production sites. The region accounts for about 15% of U.S. oil output and about 5% of natural gas production, according to the Energy Information Administration (EIA).

Oil major Chevron Corp evacuated some staff from the region but production was continuing. Elsewhere, analysts expect Saudi Arabia, the world's biggest oil exporter, to extend its voluntary output cut into October, keeping oil supply tight.

Based on that expectation, refining sources surveyed by Reuters forecast that Saudi Arabia's official selling prices for all crude grades sold to Asia in October will be raised to their highest this year.

Meanwhile, the military seized power in Gabon on Wednesday, which could hit the country's crude supplies and tighten the market further. Gabon exported a monthly average of 160,000 barrels per day to Asia from May to July, Kpler ship-tracking data showed.

Oil's gains were capped, however, by concerns over the mixed economic situation in China, the world's biggest oil importer.

We remind, Russian Deputy Prime Minister Alexander Novak said on Wednesday that Russia may extend oil export cuts to the month of October and has fully met its obligations to reduce supply in August, TASS news agency reported. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, led by Russia, began limiting output late last year to bolster the market and in June extended the supply curbs into 2024.

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MOSCOW (MRC) -- Bayer’ Crop Science division plans to invest EUR220 million in a new research and development (R&D) facility at its Monheim, Germany site, said the company.

This is the company’s largest single investment in its crop protection business in Germany since the founding of the Monheim campus in 1979, Bayer said.

The new complex with labs, offices, and a greenhouse area will offer space for approximately 200 employees and focus “on developing the next generation of chemicals for a sustainable future and enhancing the environmental and human safety of crop protection.”

“Looking into the future, we must radically transform today’s farming systems and switch to regenerative agriculture practices that produce more with less, while restoring more. There is a high demand for pushing beyond established standards in safety to unlock breakthrough innovation and crop protection solutions with better environmental profiles,” said Robert Reiter, Head of R&D at Bayer’s Crop Science division.

The investment is also a clear commitment to Europe as a base of operations, said Bayer. Over the past three years, the company states that it has invested €180 million at its German site in Dormagen, with a focus on expanding production capacities for modern crop protection.

In addition to residue analytics and metabolism studies in target crops, rotational crops and livestock for human safety, the key focus area of the new facility will be on environmental safety, Bayer said. This includes exposure studies in different environmental compartments as well as safety studies on non-target organisms such as aquatic and soil organisms, wild birds and mammals, and pollinators like honey bees and bumble bees.

Rachel Rama, head of small molecules at Crop Science, said: “With our new disruptive innovation approach – what we call CropKey – we are now designing molecules instead of selecting them.” Data science, early safety screenings, modeling and artificial intelligence are crucial elements that enable the creation of the next generation of crop protection, taking advantage of massive amounts of data and machine learning and setting a new benchmark, Rama explained.

We remind, the Supervisory Board of Bayer AG has unanimously appointed Heike Prinz to Bayer’s Board of Management effective September 1, 2023. She will become the company’s Chief Talent Officer and Labor Director. This follows the mutual agreement by Board member Sarena Lin and Bayer’s Supervisory Board to not extend her contract beyond January 31, 2024.

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MOSCOW (MRC) -- India's imports of Russian oil fell in August to a seven-month low as refiners curbed purchases due to planned maintenance outages at some plants and lower discounts for Russian grades, said Hydrocarbonprocessing.

However, oil imports from Saudi Arabia surged to a multi-month high, according to preliminary data from Kpler and Refinitiv trade flows. Refiners in India have been snapping up discounted Russian oil after some Western buyers shunned purchases over Russia's full-scale invasion of Ukraine in February last year.

But India's monthly imports of Russian oil have been declining since June as discounts began to shrink, the data from the two agencies show.

"Imports of Russian oil are likely to remain at subdued levels for a couple of months due to lower discounts, and that would force suppliers of Russian oil to provide deeper discounts," said Refinitiv analyst Ehsan Ul Haq.

Discounts on Russian oil for October loading are below USD5 a barrel to benchmark dated Brent, a refinery source said, adding his company had not yet placed an order for October Russian oil. Buying Russian oil in spot markets gives Indian refiners greater flexibility than Middle Eastern purchases that are mostly under annual contracts.

A government source last month said Indian refiners could cut imports of Russian oil as narrowing discounts were raising the price of Russian grades to above the USD60 per barrel ceiling set by Western nations. India's Russian oil imports in August declined by a fifth from July to about 1.5 million barrels per day (bpd) while those from Saudi Arabia leapt by about 63%, according to Refinitiv data.

According to Kpler estimates, India imported 1.35 million bpd of Russian oil in August, down from about 1.9 million bpd in July. Imports from Saudi Arabia rose to 825,000 bpd from 522,000 bpd in July. India's fuel demand is expected to rise in the next two months due to festivals, and that could further boost India's oil imports from the Middle East, said Haq.

We remind, Russian Deputy Prime Minister Alexander Novak said on Wednesday that Russia may extend oil export cuts to the month of October and has fully met its obligations to reduce supply in Augus. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, led by Russia, began limiting output late last year to bolster the market and in June extended the supply curbs into 2024. Russia said separately that it would cut oil exports by 500,000 barrels per day, or around 5% of its output, in August and by 300,000 bpd in September.

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MOSCOW (MRC) -- Japan's Mitsui & C, Mitsui Chemicals, IHI Corp and Kansai Electric Power Co will conduct a joint study for establishing a hydrogen and ammonia supply chain in the Osaka coastal industrial zone, Reuters said.

The announcement on Wednesday comes a day after Eneos and Osaka Gas said they would study the construction of a large e-methane facility - based on green hydrogen - and to be located in the Osaka Bay area.

The four companies would study options for receiving, storing and supplying ammonia - which can be used in power generation among other fields - in the Osaka area to potentially expand its usage in the Kansai and nearby Setouchi regions.

Hydrogen and ammonia, which do not emit CO2 when burning, are an important part of Japan's energy security strategy to reduce the usage of traditional fossil fuels. Mitsui is Japan's biggest ammonia importer.

Separately, Tokyo Gas Co (9531.T), Osaka Gas Co (9532.T), Toho Gas Co (9533.T), Mitsubishi Corp (8058.T) and Sempra Infrastructure Partners LP would study e-methane exports to Japan from the United States, they said on Wednesday.

The project would comprise a facility that would produce 130,000 metric tons of e-methane per year in Texas or Louisiana in the U.S. to be liquefied at the nearby Cameron liquefied natural gas (LNG) terminal and exported to Japan from 2030.

The capacity of the proposed facility is equivalent to 1% of the annual gas demand of Tokyo Gas, Osaka Gas and Toho Gas, five companies said in the joint statement, without providing an investment figure.

We remind, Mitsui Chemicals, Inc. announced that new affiliate Mitsui Chemicals EMS Corporation has begun doing business after its establishment on July 1, 2023. Created to take over the pellicle business acquired from Asahi Kasei Corporation, Mitsui Chemicals EMS is the No. 1 player in the market for FPD pellicles, which are used in the LCD panel exposure process.

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MOSCOW (MRC) -- Indonesian state energy company Pertamina plans in 2024 to mix more of its gasoline products with ethanol in a bid to offer alternative fuels to the public, as per Hydrocarbonprocessing.

The company will mix its 90-octane gasoline, Indonesia's most widely used fuel product under the brand Pertalite, with 7% ethanol, which will improve the quality of the fuel, Nicke Widyawati told a parliamentary hearing. Pertamina will also increase the ethanol blend in its other fuel product to 8% from 5%. That fuel, called Pertamax Green 95, is currently only offered at 17 fuel stations in Jakarta and Surabaya, Indonesia's two biggest cities.

Pertamina will import ethanol due to limited domestic production of the biofuel, made from sugar molasses.
Current domestic output of fuel-grade ethanol is estimated at around 63,000 kiloliter per year. Pertamina did not provide an estimate for how much it will seek to import.

"We are still importing gasoline, so we are just replacing some gasoline imports with ethanol, which is better in terms of emissions," Nicke said. Pertamina spokesperson Fadjar Djoko Santoso said the company has not decided how many of Pertamina's petrol stations will distribute biofuel products next year.

It also remains unclear if the plan will impact Indonesia's fuel subsidies. The government currently subsidises Pertalite sales to keep prices steady at 10,000 rupiah (65.6 U.S. cents) a litre. Nicke said Pertamina has not yet discussed the issue of subsidies with the government.

Meanwhile, President Joko Widodo aims to plant 700,000 hectares with sugarcane to increase sugar output, which Nicke said could help produce 1.2 million kiloliters of ethanol for fuel.

We remind, PT Pertamina plans to begin producing bioethanol from sugarcane and cassava this year and has also begun production of green hydrogen using geothermal energy.

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