Friday, April 3, 2020
Energy, Petrochemicals and Plastics 58
1 Oil Price Fundamental Daily Forecast – Short-Covering Rally Fueled by Hope of Output Deal
https://www.fxempire.com/forecasts/article/oil-price-fundamental-daily-forecast-short-covering-rally-fueled-by-hope-of-output-deal-642280
U.S. West Texas Intermediate and international-benchmark crude oil futures are trading higher on Friday on increased expectations of a production cut by OPEC and other major producers known as OPEC+.
The markets are following through to the upside following record gains on Thursday after U.S. President Donald Trump said he had brokered a deal that could result in Russia and Saudi Arabia cutting output by 10 million to 15 million barrels per day (bpd), representing 10-15% of global supply. Trump also said he made no offer to cut U.S. output.
2 Natural Gas Price Fundamental Daily Forecast
https://www.fxempire.com/forecasts/article/natural-gas-price-fundamental-daily-forecast-oil-price-war-truce-could-trigger-short-covering-rally-642262
Natural gas futures are trading higher on Friday after hitting a multi-year low the previous session. Thursday’s weekly U.S. Energy Information Administration (EIA) storage report failed to move the needle much although most traders interpreted the report as bearish. The reluctance to short the market at current levels on bearish data suggests investors may fear being caught on the wrong side if Russia and Saudi Arabia agree to crude oil production cuts.
3 Weekly Resin Report: Processors in Holding Pattern, Waiting for Sharper Price Slides
https://www.plasticstoday.com/resin-pricing/weekly-resin-report-processors-holding-pattern-waiting-sharper-price-slides/134317936062734
Last week’s spot resin markets were not immune to the economic uncertainty wrought by the COVID-19 pandemic. While there was a good flow of both buy and sell inquiries, processors were generally apprehensive to pull the trigger, and, ultimately, the completed volumes were less than average, reports the PlasticsExchange in its Market Update.
4 Global gas prices to remain weak until 2022: Rystad Energy
https://www.reuters.com/article/us-health-coronavirus-gas-idUSKBN21K1QC
Global gas prices this year will average even lower than previously expected due to the effects of the novel coronavirus and look set to remain weak for a few years, consultancy Rystad Energy said on Thursday.
Before the virus outbreak, gas prices were already below average due to an oversupply of liquefied natural gas (LNG) in the market.
5 Wood Mackenzie releases gas and LNG outlook
https://www.lngindustry.com/liquid-natural-gas/01042020/wood-mackenzie-releases-gas-and-lng-outlook/
Wood Mackenzie research director, Robert Sims, said: “While the collapse of LNG prices towards US production breakevens was foreseeable, the narrative for the rest of 2020 could not be more unpredictable.
“An already oversupplied LNG market comes out of a mild winter with high inventories across Europe and Asia, only to face a global pandemic which has already destroyed gas demand across China and looks increasingly set to do the same across the Asia Pacific and Europe.
6 Coronavirus and the petrochemicals industry
https://www.britishplastics.co.uk/bprblogs/guest-blog/coronavirus-and-the-petrochemicals-industry/
The coronavirus outbreak has touched virtually every aspect of modern life. For the petrochemicals industry, the landscape is shifting at an alarming pace. Only one thing seems certain: the coming decade will be shaped by this crisis. Consumer behaviour, investment decisions, the corporate landscape and even the path of globalisation will be influenced by its effects.
7 ICIS China March petrochemical index slumps on crude crash, pandemic woes
https://www.icis.com/explore/resources/news/2020/04/01/10488731/icis-china-march-petrochemical-index-slumps-on-crude-crash-pandemic-woes
Petrochemical prices in China slumped in March, hit by heavy losses in upstream crude market just as the country was emerging from severe pandemic-related restrictions that nearly ground its production and trades to a halt in February.
8 April petrochemicals prices drop as COVID-19 infection rate rises
https://www.spglobal.com/platts/en/market-insights/latest-news/petrochemicals/040220-april-petrochemicals-prices-drop-as-covid-19-infection-rate-rises
The collapse in power prices across Europe has stalled a number of power purchase agreement (PPA) negotiations in the UK, Italy, Spain, the Nordics and Germany, Luca Pedretti, chief operating officer and co-founder of PPA advisory and software business Pexapark, told S&P Global Platts in an interview Wednesday.
9 Oil price rebounds on hopes Saudi Arabia and Russia will reach deal
https://www.theguardian.com/business/2020/apr/02/oil-price-rebounds-on-hopes-saudi-arabia-and-russia-will-reach-deal
Global oil prices rebounded to more than $30 a barrel for the first time in almost a month on Thursday after Saudi Arabia and Russia signalled a possible truce in a price war that has triggered the fastest oil market collapse in decades.
The price of Brent crude leapt by 30% after the US president, Donald Trump, fanned hopes of a new deal between Riyadh and Moscow to help stabilise the oil market.
10 OPEC+ debates biggest ever cut as virus destroys oil demand
https://www.reuters.com/article/us-oil-opec-cut-size-idUSKBN21L15A
OPEC and allies are working on a deal for an unprecedented production cut equivalent to around 10% of global supply, an OPEC source said after U.S. President Donald Trump called on oil nations to stop the oil rout caused by the coronavirus pandemic.
11 The Only Logical End To The Oil War
https://oilprice.com/Energy/Energy-General/The-Only-Logical-End-To-The-Oil-War.html
The global oil and gas industry is in a state of utter distress and uncertainty at the moment. At a time where the coronavirus pandemic is decimating oil demand, the last thing that the oil world needed was an OPEC+ row that threatens to open the oil spigots in the world. Instead of taking measures to temporarily slash supply to keep up with the demand drop, Saudi Arabia and Russia are going head to head to increase supplies.
It is nigh impossible to model the current abnormal situation, as it is both temporary and unsustainable. While it is difficult to remain clear-eyed during all the confusion, one must imagine a pandemic-free world to model medium to longer term scenarios. In this case, one could appreciate the OPEC+ dilemma, which Figure-1 describes:
12 Deep OPEC+ cuts won’t be enough to prevent oil inventory build: IEA head
https://www.reuters.com/article/us-global-oil-iea-idUSKBN21L222
Deep oil output cuts by OPEC and other producing nations would not be enough to prevent a huge build in global crude inventories in the second quarter as measures to contain the coronavirus lead to “unprecedented” demand loss, the head of the International Energy Agency, Fatih Birol, said.
13 $5 Crude Could Put Canada’s Oil Sands Out Of Business
https://oilprice.com/Energy/Oil-Prices/5-Crude-Could-Put-Canadas-Oil-Sands-Out-Of-Business.html
Over the last few weeks, the higher breakeven costs for oil and the lack of sufficient takeaway capacity has come back to haunt Canada’s oil patch. Two months ago, the Canadian Association of Petroleum Producers (CAPP) was expecting upstream capital investment in Canada’s oil sands to grow this year from 2019 for the first increase in capital expenditures in five years due to “a more competitive economic environment,” thanks to new policies of the Alberta government.
14 WoodMac: Coronavirus and the petrochemicals industry
https://www.bicmagazine.com/industry/refining-petchem/woodmac-coronavirus-and-the-petrochemicals-industry/
The coronavirus outbreak has touched virtually every aspect of modern life. For the petrochemicals industry, the landscape is shifting at an alarming pace. Only one thing seems certain: the coming decade will be shaped by this crisis. Consumer behaviour, investment decisions, the corporate landscape and even the path of globalisation will be influenced by its effects.
15 Lower for Longer – Chemical Sector
https://www.bicmagazine.com/industry/refining-petchem/lower-for-longer/
The global chemical sector should prepare for an extended downturn along with lower-for-longer oil prices, both of which will have big implications for profitability and investments, reports ICIS Chemical Business.
“It’s very possible that Q3 could have negative GDP as well [as Q2], and then the question is how big is the bounce back towards the end of the year?” said Rhian O’Connor, ICIS lead analyst, demand forecasting on an ICIS webinar this week.
16 Platts market on close shows commodity markets functioning despite COVID-19
https://blogs.platts.com/2020/04/02/platts-market-on-close-commodity-covid-19/
A key question for any market during times of uncertainty and volatility is what is happening to liquidity?
Over recent weeks commodity prices, and particularly oil markets, have seen unprecedented volatility. Although the forward view may become clearer, there is still huge uncertainty around fundamentals in the months ahead. S&P Global Platts has a unique insight into several key commodity markets through its Market on Close (MOC) assessment process.
17 Asia petrochemical makers recalibrate output amid pandemic-hit demand
https://www.icis.com/explore/resources/news/2020/04/03/10489918/asia-petrochemical-makers-recalibrate-output-amid-pandemic-hit-demand
Petrochemical producers in Asia are looking at further reducing output in the face of a sharp demand downturn and low crude prices that could last months amid a coronavirus pandemic.
Some downstream plants are bringing forward scheduled turnarounds to manage a strong inventory build-up, while economic activity in a huge swathe of the globe has virtually halted due to lockdowns.
18 Oil refiners face reckoning as demand plummets
https://www.bicmagazine.com/industry/refining-petchem/oil-refiners-face-reckoning-as-demand-plummets/
The global oil refining industry is facing a reckoning from falling fuel demand that is the deepest and fastest ever, as reported by Reuters.
Within weeks, the industry will need to cut output by 30% or more as the coronavirus pandemic keeps much of the world at home with little need to drive or fly. Smaller and financially weak oil refiners may not emerge from the crisis, say refining consultants and traders.
19 ‘It’s going to be very difficult and very painful’: Oilpatch begins layoffs and oil production cuts
https://www.cbc.ca/news/business/bonterra-mullen-wcs-wti-1.5516400
After several weeks of speculation about when the oilpatch would take significant steps in response to record low oil prices, companies in Western Canada are now beginning to pull back on oil production and layoff workers.
Heavy oil prices in Alberta have been hit the hardest, selling for under $4 US a barrel in recent days.
20 Why Alberta is throwing billions behind the Keystone XL pipeline
https://www.cbc.ca/news/business/analysis-alberta-invests-in-keystone-1.5516144
With the energy sector still reeling from weeks of economic turmoil, Alberta’s United Conservative government announced Tuesday it is throwing its financial heft behind the long-delayed Keystone XL pipeline.
The investment of $1.5 billion, plus a $6-billion loan guarantee, aims to accelerate construction of the massive project and was warmly greeted by a sector desperate for some good news.
21 Thermoformers Step Up to Produce Protective Gear for Healthcare Workers
https://www.plasticstoday.com/medical/thermoformers-step-produce-protective-gear-healthcare-workers/49704222062744
All across the country, manufacturers are stepping up as best they can to help healthcare providers struggling with shortages of medical equipment. In Janesville, WI, custom packaging supplier Prent Corp. has dedicated a line to the production of face shields needed by local healthcare facilities. In Kalamazoo, MI, Fabri-Kal will be delivering its first batch of face shields later this week to hospitals in southwest Michigan.
22 Saudi Belligerence Pushes VLCC Rates to Comedic Highs
https://www.rigzone.com/news/saudi_belligerence_pushes_vlcc_rates_to_comedic_highs-01-apr-2020-161585-article/
Whenever oil prices head lower for what is perceived to be a finite period of time, crude traders tend to go for contango plays. It is a market structure conveying expectations that the future price will be higher than the current spot price. For decades, whenever such a situation or the possibility of it has arisen, traders have hoarded oil, often in floating storage, hoping to sell it for higher prices further down the line.
23 Saudi Arabia to build two petrochemicals units for $1.8 billion
https://meconstructionnews.com/40287/saudi-arabia-to-build-two-petrochemicals-units-for-1-8-billion
SK Gas have formed a joint venture with Advanced Global Investment Company to setup the plants in Jubail Industrial City
Saudi Arabia’s Advanced Petrochemical Company has announced that it has signed a deal with South Korea’s SK Gas to set up two petrochemicals units for a combined value of $1.8 billion in the Kingdom.
24 Fitch Revises PTT Global Chemical to Negative; Affirms at ‘AA+(tha)‘
https://www.fitchratings.com/research/corporate-finance/fitch-revises-ptt-global-chemical-to-negative-affirms-at-aa-tha-31-03-2020
Fitch Ratings – Bangkok – 31 Mar 2020: Fitch Ratings (Thailand) Limited has revised PTT Global Chemical Public Company Limited’s (PTTGC) Outlook to Negative from Stable. The agency has also affirmed PTTGC’s National Long-Term Rating and senior unsecured rating at ‘AA+(tha)’ and National Short-Term Rating at ‘F1+(tha)’.
25 IHS Markit sees forced oil production cuts of 10MMbpd ahead
http://www.worldoil.com/news/2020/3/31/ihs-markit-sees-forced-oil-production-cuts-of-10mmbpd-ahead
Research firm IHS Markit expects up to 10 MMbpd of world oil production will be cut or shut-in from April to June 2020 as oil storage fills up and output from financially strapped companies begins to fall. If oil cannot be sold or stored, it cannot be produced. Transportation constraints and lack of access to every available tank will prevent the utmost maximum level of storage capacity being reached.
