Friday, May 22, 2020
Energy Petrochemicals and Plastics 65
1 Oil Price Fundamental Daily Forecast – Escalating US-China Tensions Encouraging Profit-Taking
https://www.fxempire.com/forecasts/article/oil-price-fundamental-daily-forecast-escalating-us-china-tensions-encouraging-profit-taking-650753
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are down over 5% on Friday as escalating tensions between the United States and China encouraged long investors to take profits ahead of the weekend. Prices were also pressured by concerns over the pace of demand recovery from the coronavirus crisis.
At 10:42 GMT, July WTI crude oil futures are trading $31.80, down $2.12 or -6.25% and July Brent crude oil futures are at $34.18, down $1.88 or -5.21%.
2 Natural Gas Price Fundamental Daily Forecast
https://www.fxempire.com/forecasts/article/natural-gas-price-fundamental-daily-forecast-lower-as-traders-shrug-off-friendly-eia-storage-report-650767
Natural gas futures are edging lower on Friday but still holding above a pair of major bottoms at $1.822 and $1.802. There was little follow-through to the downside after Thursday’s sharp break. Yesterday’s sell-off came as a surprise since the weekly government storage report came in on the low end of estimates. On Friday, July natural gas futures are trading $1.850, down $0.002 or -0.11%.
3 Weekly Resin Report: Trading Activity Picks Up, as Manufacturers Begin to Reopen
https://www.plasticstoday.com/resin-pricing/weekly-resin-report-trading-activity-picks-manufacturers-begin-reopen/208470720963051
Spot plastics trading continued to improve last week, as an increasing number of temporarily shuttered manufacturing facilities returned to operation, requiring resin to run. Trade flow from both buyers and sellers was fluid and transacted volumes rivaled the average tally seen during the strong first quarter of 2020, reports the PlasticsExchange in its Market Update.
4 Negative pricing seen spreading from oil to gas as European demand slumps
https://www.reuters.com/article/us-europe-gas-idUSKBN22Y1T3
A month after U.S. crude oil prices collapsed into negative territory, European gas markets are facing the prospect of also slipping into the red after a slump in demand and surging inventories pushed prices into low single digits.
5 Sellers beware: Price collapse triggers bartering over oil and gas deals
https://www.reuters.com/article/us-oil-m-a-idUSKBN22X0ID
At a time when most oil companies are slashing budgets, dividends and headcounts to preserve cash, sellers are facing a difficult choice between sweetening the deal or risking losing it altogether.
Premier Oil’s CEO said he is seeking a cheaper price for North Sea assets it agreed to buy from BP for $625 million and Energean is doing the same with a $700 million purchase from Edison.
6 As the economy weakens, capturing savings on oil-based raw materials offers a lifeline to chemical companies.
https://www.mckinsey.com/industries/chemicals/our-insights/how-to-capture-savings-from-the-oil-price-drop-and-bolster-profits-quickly
The halving of crude-oil prices since early March has created an important opportunity for chemical companies, and all buyers of chemicals, to capture savings on oil-based raw materials. The use of new digital tools gives these companies a chance to capture the impact more quickly than they did in previous oil busts.
But companies should move quickly, since signs that the economic turmoil resulting from the coronavirus crisis could severely reduce chemical-industry profitability have already appeared. Collectively, the chemical industry is one of its own biggest customers. In the current challenging environment, companies will need to do whatever they can to cut their own costs when they buy, while preserving their margins when they sell. Smart procurement moves and efforts to ensure that the sales force doesn’t lower its sales prices could provide a lifeline to more than a few chemicals players.
7 The future of energy after Covid-19: three scenarios
https://www.woodmac.com/news/feature/the-future-of-energy-after-covid-19-three-scenarios/
The coronavirus pandemic has hit the world economy harder than any event since World War 2, and will have a lasting impact on energy demand. As governments around the world have shuttered businesses and restricted freedom of movement for billions of people, consumption of oil, gas and power has fallen.
Demand for oil, in particular, has plummeted as a result of the reductions in road transport and air travel. It will not recover quickly, if ever, to the path it was on before the pandemic hit.
8 Jet Fuel Demand Will Take Years To Recover
https://oilprice.com/Energy/Crude-Oil/Jet-Fuel-Demand-Will-Take-Years-To-Recover.html
Airlines and aircraft manufacturers face a few years of losses and cost cuts before air travel numbers return to pre-crisis levels. In these several years of a marked downturn for the industry, demand for jet fuel is expected to be the last oil product to see demand recover to levels from 2019.
While oil demand for road transportation already shows signs of recovery as people prefer commuting with their own cars rather than using public transport, demand for jet fuel will probably take much longer—possibly years—to recover, analysts say.
9 China demand insufficient to sustain Asia petrochemical market gains
https://www.icis.com/explore/resources/news/2020/05/22/10510643/insight-china-demand-insufficient-to-sustain-asia-petrochemical-market-gains
China has buoyed petrochemical markets in Asia in recent weeks aided by rising upstream crude prices. But sustaining gains remains a big question mark as the coronavirus pandemic has triggered an unprecedented collapse in demand that could last beyond this year.
The global demand shock and supply disruption that ensued as countries isolated themselves to contain the deadly virus may prove too enormous for a quick fix, given that recovery of the world’s second-largest economy in the second half is uncertain at best since external demand is beat.
10 Asia’s petchem demand stays bleak in new norm uncertainty
https://www.icis.com/explore/resources/news/2020/05/22/10510176/asia-s-petchem-demand-stays-bleak-in-new-norm-uncertainty
Asia’s consumption for many plastics would be limited even as countries ease their lockdowns gradually, as the uncertainty surrounding the new norm in a yet-to-foreseen success against the coronavirus remains.
In the petrochemical chain, a common trend emerges, that is, supply is outstripping demand in general.
11 Russia’s leading petrochemical company Sibur raises $208mn with bonds issue at record low yields
http://www.intellinews.com/russia-s-leading-petrochemical-company-sibur-raises-208mn-with-bonds-issue-at-record-low-yields-183889/
Russia’s leading petrochemical producer Sibur Holding has successfully closed the order book for its BO-01 and BO-02 exchange-traded bond issues, worth RUB10bn ($139mn) and RUB5bn ($69mn) respectively, that pay the lowest ever corportate bond yields, the company said in a statement on May 21.
12 US chem shares mixed as oil rises, stock markets fall
https://www.icis.com/explore/resources/news/2020/05/21/10510145/us-chem-shares-mixed-as-oil-rises-stock-markets-fall
The general markets fell after signs of rising tensions between China and the US.
Among them was the passage in the US Senate of the Holding Foreign Companies Accountable Act (Senate Bill 945).
The bill would require public companies to disclose whether they are owned or controlled by a foreign government. The bill’s sponsor, US Senator John Kennedy (Republican-Louisiana), singled out China in his announcement of the legislation.
13 Royalty exemptions could save the day for U.S. oil and gas operators, Rystad says
https://www.offshore-energy.biz/royalty-exemptions-could-save-the-day-for-u-s-oil-and-gas-operators-rystad-says/
Despite the recent relative oil price recovery, dozens of U.S. operators are still threatened by bankruptcies even at a WTI oil price of $30 per barrel. A Rystad Energy analysis shows that royalty exemptions could save the day for many of them.
To begin with, Rystad’s analysis has found that even at an average WTI price of $30 this year, about 73 E&Ps in the U.S. may have to file for Chapter 11 bankruptcy protection, with 170 more following in 2021. The number of bankruptcies could climb even more in lower price scenarios.
14 Why bond investors are willing to bet on money-losing Pemex after oil price crash
https://www.reuters.com/article/us-mexico-pemex-bonds-analysis-idUSKBN22Y0KN
Mexico’s state-owned oil company Petroleos Mexicanos has seen investor sentiment improve in recent weeks despite sky-high debts, a slump in demand and no clear direction about how the government will turn the money-losing driller around.
15 World’s Third Largest Oil Consumer Sees Very Slow Demand Recovery
https://oilprice.com/Energy/Energy-General/Worlds-Third-Largest-Oil-Consumer-Sees-Very-Slow-Demand-Recovery.html
Crude oil demand in India will take longer to recover than many hope for as the country braces for the worst recession in its history after a two-month lockdown.
Bloomberg reports, citing Indian oil industry executives, that demand for the commodity might take until the end of the year to return to pre-crisis levels after last month, fuel demand at one point dropped by as much as 70 percent.
16 How the Plastics Industry is Providing Solutions During This Time of Crisis
https://www.plasticsindustry.org/blog/how-plastics-industry-providing-solutions-during-time-crisis
The plastics industry is mobilizing to relieve the burden of COVID-19 on the nation’s healthcare system. Our members are making components for critical care machines, disposable medical items, and single-use packaging for treatments and food. Resin manufacturers are churning out material. Companies have added shifts or switched production lines to supply high demand for personal protective equipment and more. Stories of innovation, hard work and charity are countless.
17 Alaskan and Canadian oil finds new Chinese buyers as their economy restarts
https://www.worldoil.com/news/2020/5/20/alaskan-and-canadian-oil-finds-new-chinese-buyers-as-their-economy-restarts
Canadian and Alaskan crude that normally travels to the U.S. West Coast is finding a market in China, where demand is almost back to pre-pandemic levels.
The Sofia became the second oil tanker in less than a month to ship Alaskan oil to Qingdao, China, when it left Valdez over the weekend, data compiled by Bloomberg show. At about the same time, the Maria Princess left Vancouver also bound for Qingdao, becoming at least the third oil tanker to sail from British Columbia for China this year. Draft readings indicate the ships were full when they departed.
18 Shell and CNOOC ink deal for $5.6-billion, phase 3 petchems complex in China
http://chemweek.com/CW/Document/111340/Shell-and-CNOOC-ink-deal-for-%2456-billion-phase-3-petchems-complex-in-China
Shell has declined to reveal the expected investment cost but local reports put it at about $5.6 billion. Shell says it is too early to say when the FID will be taken. Naphtha feedstock will be supplied from CNOOC refineries, and from the domestic and international feedstock markets.
19 Global demand for natural gas will drop 2% in 2020 as Covid-19 lockdowns take toll
https://www.rystadenergy.com/newsevents/news/press-releases/global-demand-for-natural-gas-will-drop-2pct-in-2020-as-covid-19-lockdowns-take-toll/
Commercial and industrial demand for natural gas is declining as most countries around the world impose lockdowns to limit the spread of the Covid-19 pandemic. Rystad Energy estimates global natural gas demand to fall by almost 2% this year as a result of the lower activity.
