Friday, March 20, 2020
Energy, Petrochemicals and Plastics 56
1 Analyst Cuts 2020 Oil Price Forecast by $19
https://www.rigzone.com/news/analyst_cuts_2020_oil_price_forecast_by_19-19-mar-2020-161441-article/
Fitch Solutions Country Risk and Industry Research (FSCRIR) has cut its 2020 Brent oil price forecast by $19 per barrel, a new research note has revealed.
The company now sees Brent averaging $43 per barrel this year, compared to its previous 2020 forecast of $62 per barrel. FSCRIR forecasts that Brent will average $45 per barrel in 2021 and $49 per barrel in 2022. This compares to its previous forecasts of $63 per barrel in 2021 and $62 per barrel in 2022.
2 Crude Oil Price Update – Trader Reaction to $24.52
https://www.fxempire.com/forecasts/article/crude-oil-price-update-trader-reaction-to-24-52-24-50-will-set-the-tone-639947
The test of $24.52 to $24.50 is very important to the near-term structure of the market. This is because counter-trend buyers may come in on a test of this area in an effort to form a potentially bullish secondary higher bottom.
3 Oil Price Fundamental Daily Forecast – Biggest Concern for Short-Sellers Should Be Complacency
https://www.fxempire.com/forecasts/article/oil-price-fundamental-daily-forecast-biggest-concern-for-short-sellers-should-be-complacency-639707
Continue to trade the trend, but don’t get complacent. The market is going down because traders anticipate a flood of oil to hit supply on April 1. If the Saudi’s and Russians somehow back away from their threats to increase production then crude oil could snap back $10 to $15 rather quickly.
4 A crude tsunami: Up to 3 million bpd of extra oil can hit the market from April, more coming in May
https://www.rystadenergy.com/newsevents/news/press-releases/a-crude-tsunami-up-to-3-million-bpd-of-extra-oil-can-hit-the-market-from-april-more-coming-in-may/
The extra oil coming into the global market from April will be as much as 3 million barrels per day (bpd), Rystad Energy estimates. Two million bpd is what OPEC+ countries are realistically able to add next month based on their storage, spare capacity and ramp up capabilities. Another million bpd could come if a cease-fire is agreed upon in Libya and the country reaches pre-shut-in levels.
5 200+ OFS Firms in Europe Could Go Bankrupt
https://www.rigzone.com/news/200_ofs_firms_in_europe_could_go_bankrupt-18-mar-2020-161427-article/
More than 200 oil field service (OFS) firms in Europe could go bankrupt as COVID-19 slashes billions of dollars off the market.
That’s according to Rystad Energy, which expects the effect of the pandemic to hit the continent’s OFS market “hard” and cut purchases by about $5 billion year-on-year. Most of the lost purchases, worth around $4.5 billion, are expected to hit Norway and Britain, mainly within the segments of MMO, drilling rigs and well services.
6 Weekly Resin Report: After Slow Start, Week Ends with Large Volumes of PE Changing Hands
https://www.plasticstoday.com/resin-pricing/weekly-resin-report-after-slow-start-week-ends-large-volumes-pe-changing-hands/112336832862636
The spot resin markets were slow most of last week, as many participants retreated to their bunkers, watching the commodity and stock markets erode in epic fashion. There is no doubt that the severe restriction of non-essential travel, in an attempt to contain the spread of the novel coronavirus, as well as the effective shutdown of public events will have a tremendous impact on the economy and, ultimately, plastics demand, reports the PlasticsExchange in its Market Update.
7 Naphtha East/West spread hits record high at $42/mt as Europe market reels from coronavirus
https://www.spglobal.com/platts/en/market-insights/latest-news/oil/031820-naphtha-eastwest-spread-hits-record-high-at-42mt-as-europe-market-reels-from-coronavirus
Demand for naphtha in Europe was extremely thin for both petrochemical demand for open-specification naphtha and gasoline blending demand for light virgin naphtha; the key CIF NWE naphtha assessment hit a 17-year low on Monday. Asian demand is a key driver for the open specification European naphtha grades, while the glut of gasoline barrels in both regions has eroded demand for blending grades.
8 No Major Production Cutbacks of Material or Downstream Products Yet: Plastics Technology
https://www.ptonline.com/blog/post/no-major-production-cutbacks-of-material-or-downstream-products-yet
In view of the fast-paced life changes/disruptions taking place across the country due to the coronavirus pandemic, particularly starting this week, I reached out to a handful of industry sources, including a custom injection molder; a leading molder of HDPE and LDPE caps and closures for the dairy and water bottle market sectors; a major thermoformer; a compounder of engineering thermoplastics; and resin-pricing consultants.
These initial responses to whether production—ranging from materials to downstream plastics products—is being scaled back appear to show the opposite. This is particularly the case in the major packaging market sector ranging from film wrap to food packaging to healthcare packaging. Due to the fluidity of the situation we are all in, these sources preferred to stay anonymous.
9 WoodMac: Industry slashes spending as price rout deepens: Can companies cope?
https://www.bicmagazine.com/industry/commodities/woodmac-industry-slashes-spending-as-price-rout-deepens-can-/
Survival mode has returned to the oil and gas sector as the oil price rout deepens. Corporate financials are in better shape than during the 2014/2015 crash, but room for maneuver is limited. Can companies cope with prices this low?
This crisis is very different from those that the sector has seen before. Debt and equity markets are all but closed for the US Independents, in contrast to the previous oil price collapse. Upstream M&A liquidity is also limited. Survival will rely on swift and deep cuts to investment.
10 Oil Could Crash To $10 As World Runs Out Of Storage
https://oilprice.com/Energy/Energy-General/Oil-Could-Crash-To-10-As-World-Runs-Out-Of-Storage.html
The growing supply glut in oil markets could end up filling all storage tanks worldwide, potentially causing prices to drop even further
Global oil storage could overflow in the coming weeks as the coronavirus pandemic has dealt a severe blow to demand while Saudi Arabia has promised to supply 12.3 million bpd—not just in April but also over the next few months.
11 Lack of Demand Results in Single Digit Gas Draw
https://www.enverus.com/blog/lack-of-demand-results-in-single-digit-gas-draw/
Natural gas storage inventories decreased 9 Bcf for the week ending March 13, according to the EIA’s weekly report. This was larger than the expected draw of 4 Bcf.
Working gas storage inventories now sit at 2.034 Tcf, which is 878 Bcf above inventories from the same time last year and 281 Bcf above the five-year average.
12 The Inevitable Outcome Of The Oil Price War
https://oilprice.com/Energy/Oil-Prices/The-Inevitable-Outcome-Of-The-Oil-Price-War.html
One might reasonably posit that when Crown Prince Mohammed bin Salman (MbS) signalled that Saudi Arabia was once again going to produce oil to the maximum to crash oil prices in a full-scale oil price war, Russian President Vladimir Putin probably fell off the horse he was riding bare-chested somewhere in Siberia because he was laughing so much. There is a phrase in Russian intelligence circles for clueless people that are ruthlessly used without their knowledge in covert operations, which is ‘a useful idiot’, and it is hard to think of anyone more ‘useful’ in this context to the Russians than whoever came up with Saudi’s latest ‘plan’. Whichever way the oil price war pans out, Russia wins.
13 Putin won’t cave in to Saudi oil-price blackmail
https://www.energyvoice.com/coronavirus/229912/putin-wont-bow-to-saudi-oil-price-blackmail-articleisfreeput/
Russian President Vladimir Putin will refuse to submit to what the Kremlin sees as oil blackmail from Saudi Arabia, signalling the price war that’s roiling global energy markets will continue.
The unprecedented clash between the two giant exporters — and former OPEC+ allies — threatens to push the price of a barrel below $20, but the Kremlin won’t be the first to blink and seek a truce, said people familiar with the government’s position.
14 Saudi ‘Shock And Awe’ Is Crushing Shale Drillers
https://oilprice.com/Energy/Energy-General/Saudi-Shock-And-Awe-Is-Crushing-Shale-Drillers.html
WTI dropped into the low $20s on Wednesday, and the near-term outlook is grim.
Oil lobbyists have pushed Congress for help, and a group of Republican Senators pleaded in a letter to the Saudi government to back off the price war, but there is little evidence to suggest that a dozen U.S. Senators will be able to convince Saudi Arabia to change course.
15 Canada Is First Price-War Casualty
https://www.rigzone.com/news/wire/canada_is_first_pricewar_casualty-19-mar-2020-161442-article/
Hit by unfettered supply from the world’s top two crude exporters and reduced demand as a result of the coronavirus, the benchmark blend of crude produced from Canada’s oil sands plunged to a record low of $7.47 a barrel on Wednesday. The fallout: Virtually every barrel of oil now produced there will come at a loss at a time when the energy industry generates 10% of Canada’s gross domestic product and a fifth of its exports.
16 Canadian oil plummets to lowest level on record, TSX halted as market rout continues
https://www.cbc.ca/news/business/stock-markets-loonie-wednesday-1.5501335
The price of a barrel of Canadian oilsands crude oil fell to its lowest level ever on Wednesday and the Toronto Stock Exchange was once again halted to stop heavy-selling activity.
Western Canadian Select (WCS) was changing hands at $7.63 per barrel, down $4.60 from Tuesday’s level. The U.S. benchmark known as West Texas Intermediate (WTI) also fell to below $23 a barrel, a level it has not hit since 2003.
17 At $30 oil, offshore drillers may be out of options
https://www.energyvoice.com/coronavirus/229957/at-30-oil-offshore-drillers-may-be-out-of-options/
RigLogix has contacted a number of rig owners and operators and the consensus seems to be that it’s going to get worse before it gets better, especially if current conditions persist. Announcements of operators cutting 2020 capital expenditure plans are coming fast and furious with a 20-30% reduction typical.
18 Oil Up as Texas Supports Trump-Led Output Proposal
https://www.rigzone.com/news/wire/oil_up_as_texas_supports_trumpled_output_proposal-20-mar-2020-161456-article/
Oil kept rising after a record surge as President Donald Trump waded into the price war between Saudi Arabia and Russia, while a Texas regulator proposed his state coordinate output cuts with the feuding producers.
19 OPEC supply curbs, U.S. measures could support oil prices near term: Goldman
https://www.reuters.com/article/us-oil-research-goldman-idUSKBN2170LO
Supply restraint by core-OPEC producers could push second-quarter Brent oil prices up to $30 a barrel, while U.S. measures to support the market could underpin prices in the near term, Goldman Sachs said in a research note.
Citing Wall Street Journal reports that the United States was considering intervening in the ongoing Saudi-Russian price war and Texas regulators may curb oil output, the U.S. investment bank said such action would reduce global and U.S. domestic supplies.
20 Oil gains as governments pile on the economic stimulus
https://www.reuters.com/article/us-global-oil-idUSKBN21709H
Oil prices rose on Friday as the world’s richest nations poured unprecedented aid into the global economy to stop a coronavirus-driven recession and U.S. President Donald Trump hinted he may intervene in the price war between Saudi Arabia and Russia.
21 U.S. power industry may ask key employees to live at work if coronavirus worsens
https://www.reuters.com/article/us-health-coronavirus-usa-utilities-idUSKBN2171AC
The U.S. electric industry may ask essential staff to live on site at power plants and control centers to keep operations running if the coronavirus outbreak worsens, and has been stockpiling beds, blankets, and food for them, according to industry trade groups and electric cooperatives.
22 China’s polymer inventories edge higher
https://www.argusmedia.com/en/news/2088494-chinas-polymer-inventories-edge-higher
China’s polymer inventories have increased slightly as consumption continues to slow, despite attempts to boost manufacturing activity as the coronavirus outbreak fades.
China did not report any new domestic coronavirus cases today for the first time since the outbreak started around 2-3 months ago.
23 Europe chem prices hint gains, Portugal also enters quarantine
https://www.icis.com/explore/resources/news/2020/03/19/10484480/europe-chem-prices-hint-gains-as-portugal-also-enters-quarantine
rude oil futures and some European petrochemicals prices rose on Thursday after additional stimulus measures in the region were announced and Portugal became the latest country to approve a two-week quarantine to contain the spread of coronavirus.
24 Factbox: Global oil, gas producers cut spending after crude price crash
https://www.reuters.com/article/us-global-oil-cuts-factbox-idUSKBN2161DX
Oil and gas companies aim to cut spending as the impact of the new coronavirus on demand and a push by Saudi Arabia and Russia to ramp up output have hammered oil markets.
Below are plans announced by international energy companies (in alphabetical order):
25 April Could Be Worst Month Ever For Oil
https://oilprice.com/Energy/Energy-General/April-Could-Be-Worst-Month-Ever-For-Oil.html
The millions of barrels of additional supply promised by Saudi Arabia will take time to reach their destination. On the demand side, major economies have only begun to slow down, and the gaping hole where the economy once stood is expected to widen. A growing number of analysts say that the global economy is already in a recession.
