Friday, June 19, 2020
Energy, Petrochemicals and Plastics 69
1 Oil tops $42 as OPEC+ laggards pledge better compliance
https://www.reuters.com/article/us-global-oil-idUSKBN23Q045
Oil rose to above $42 a barrel on Friday, adding to gains in the previous session, after OPEC producers and allies promised to meet supply cuts and signs of demand, hit by the coronavirus crisis, recovering.
Iraq and Kazakhstan, during a meeting of an OPEC+ panel on Thursday, pledged to comply better with oil cuts, sources said. This means curbs by the Organization of Petroleum Exporting Countries and allies, known as OPEC+, could deepen in July.
2 Oil Price Fundamental Daily Forecast – Higher after OPEC+ Laggards Promise to Meet Supply Cut Obligations
https://www.fxempire.com/forecasts/article/oil-price-fundamental-daily-forecast-higher-after-opec-laggards-promise-to-meet-supply-cut-obligations-656263
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Friday and in a position to close higher for the week after OPEC producers and allies promised to meet supply cuts and signs of demand, hit the coronavirus crisis, recovering.
At 10:46 GMT, August WTI crude oil is trading $40.03, up $0.98 or $2.51% and August Brent crude oil is at $42.40, up $0.89 or +2.14%. Both futures contracts are on pace for weekly gains of more than 9%.
3 Oil prices no longer especially cheap after strong rally
https://www.reuters.com/article/us-global-oil-kemp-idUSKBN23Q1YN
Perceptions about prices tend to be over-influenced by recent experience so current prices feel very low to producers used to receiving $60-80 per barrel over the 2018/19 period.
But over a longer time horizon, current prices are not especially cheap, and are only a little below long-run averages over the last few price cycles.
4 Prospect Of Peak Oil Demand Puts Cap On Total Global Oil Reserves
https://oilprice.com/Energy/Crude-Oil/Prospect-Of-Peak-Oil-Demand-Puts-Cap-On-Total-Global-Oil-Reserves.html
The 2020 release of Rystad Energy’s annual global energy outlook reveals that the Covid-19 downturn will expedite peak oil demand, putting a lid on exploration efforts in remote offshore areas and as a result reducing the world’s recoverable oil by around 282 billion barrels.
Global total expected remaining recoverable oil resources decrease to 1,903 billion barrels, 42% of which are in OPEC territory, with the remaining 58% located outside the alliance.
5 Russian negotiator says no need to extend oil cuts beyond July:
https://www.reuters.com/article/us-oil-opec-russia-rdif-idUSKBN23Q10J
The head of Russia’s sovereign wealth fund Kirill Dmitriev sees no point in extending strict global oil output cuts as world economies and oil demand recovers from the depths of the coronavirus crisis, he told the RBC Daily newspaper.
The comments from Dmitriev, who is one of Moscow’s top negotiators in oil talks, indicate that Russia wants curbs to be eased from August as envisaged by the existing plan.
6 UBS raises Brent forecasts, sees undersupplied oil market
https://www.reuters.com/article/us-global-oil-research-ubs-idUSKBN23P20D
UBS raised its forecasts on Thursday for the price of Brent crude this year, citing expectations of an undersupplied oil market as demand starts to pick up on the back of a recovering global economy.
“Supply is being curbed by OPEC+ voluntary production cuts and due to massive cuts in non-OPEC oil companies’ capital expenditures,” the bank said, as it raised its forecast for Brent to $40 per barrel by the end of September, from $32, and to $45 per barrel by the end of December, from $43.
7 Post-COVID Global Oil Demand Series – Part 1: Petrochemicals and Construction Materials
https://www.oilandgas360.com/post-covid-global-oil-demand-series-part-1-petrochemicals-and-construction-materials/
The coronavirus pandemic has ushered in a new age and as the world begins to adjust to the new normal, demand for commodities like oil and natural gas has and will continue to change. While individuals may not be traveling via airplane or driving their cars as much as before the pandemic, there are many goods and materials created from hydrocarbons that will continue to be a necessary staple for the reestablishment of a healthy global economy. Part one of our four part series on Post-COVID oil demand will investigate the change in global oil demand for petrochemicals and construction materials.
8 Prices of Volume Resins Bottom Out: Plastics Technology
https://www.ptonline.com/blog/post/prices-of-volume-resins-bottom-out
Moving toward the third quarter, prices of volume commodity resins generally appeared to have bottomed out, though there was potential for some further downward movement for PS, nylon 6 and perhaps PET. In contrast, upward movement for some resins is also likely with the return of the Chinese export market, for which a significant volume of domestic supply is dedicated. For example, 40% of domestic PE production and 30% of PVC is earmarked for export to China
9 Contraction Slows for Processors : Plastics Technology
https://www.ptonline.com/blog/post/contraction-slows-for-processors-
The Gardner Business Index for plastics processing moved up by eight points in May, registering 41.5 after setting an all-time low in April. For the first time since the government curtailed normal business operations to prevent the spread of COVID-19, all components of the Index moved towards more “normal” levels.
10 PET Resin Demand Slackens Because of COVID-19
https://www.plasticstoday.com/packaging/pet-resin-demand-slackens-because-covid-19/160394835563215
Polyethylene terephthalate (PET) is the most commonly used plastic to package bottled water, soft drinks, and on-the-go food products, and demand for those products tends to follow a cyclical, fairly predictable pattern. For example, as temperatures begin to rise and the European summer holiday season begins, the demand for PET resin increases, writes Susan Mair, Petrochemical Analyst at Independent Commodity Intelligence Services (ICIS), in a recent article.
11 Upstream rally hits petrochemical production margins
https://www.spglobal.com/platts/en/market-insights/latest-news/petrochemicals/061820-upstream-rally-hits-petrochemical-production-margins
Rises in feedstock naphtha and steady olefins prices have caused cracker margins to fall around 25% so far in June from May’s and around 75% from March’s.
Cracker operators are now also considering shifting from 100% naphtha cracking to minimal LPG allowance as the latter becomes more profitable.
In aromatics markets, while it may be too soon to expect driving demand to return to pre-lockdown levels given long-term remote working, gasoline prices have rebounded from the lows in April.
12 The week in petrochemicals
https://www.spglobal.com/platts/en/market-insights/latest-news/petrochemicals/061520-asia-the-week-in-petrochemicals
European aromatics and methanol prices have seen only a marginal impact from slow demand recovery, and several markets are likely to continue facing high inventory pressure. “Blenders are waking up,” a toluene producer said, following a recovery in transportation fuel demand.
As Europe’s five biggest economies ease travel restriction, road traffic was nearing pre-pandemic levels in June, data from Apple mobility showed.
After hitting multi-year lows mid-March, average driving activity in the week to June 13 in France, Germany, Italy, Spain and the UK was 96% of January 13 levels, based on direction routing requests, according to the data, up from 76% the prior week.
13 Margin squeeze hits some Asia petrochemical makers on naphtha, C2 spikes
https://www.icis.com/explore/resources/news/2020/06/17/10519718/margin-squeeze-hits-some-asia-petrochemical-makers-on-naphtha-c2-spikes
Some petrochemical producers are hurting from a margin squeeze caused by crude-driven spikes in feedstock prices, and have resorted to cutting production as their ability to hike offers is constrained by poor demand.
Naphtha – the main feedstock for petrochemical production in Asia – has largely been tracking gains in upstream crude prices.
14 Asia-Pacific ethylene prices may lose steam
https://www.argusmedia.com/pages/NewsBody.aspx?id=2115194&menu=yes
The rally in c in the third quarter because of weakening downstream margins and a rise in long-haul import volumes.
Spot prices have risen to $830-850/t cfr northeast Asia, up by another $30-60/t from the end of last week to the highest since 4 February this year. The rally has now been sustained for an eighth consecutive week, with prices more than doubling from levels in the $300s/t cfr northeast Asia on 21 April.
15 U.S. oil inventory continues to climb, offsetting rise in fuel demand
https://www.worldoil.com/news/2020/6/18/us-oil-inventory-continues-to-climb-offsetting-rise-in-fuel-demand
Gasoline and distillate inventories fell last week, according to a report from the Energy Information Administration, reflecting a slight pick-up in demand during the summer driving season with coronavirus-led lockdowns easing in some parts of the U.S. Stubbornly high crude inventories still threaten to cap crude’s rally from historic lows in April.
“The distillate draw is a clear sign of the reopening of the economy and transportation returning,” said Rob Thummel, portfolio manager at Tortoise. “We still need to see inventories come down. That’ll be the catalyst for oil prices to move higher.”
16 Global pandemic cost oil industry 84,000+ jobs, PESA research shows
https://www.worldoil.com/news/2020/6/18/global-pandemic-cost-oil-industry-84-000plus-jobs-pesa-research-shows
Research by the Petroleum Equipment and Services Association (PESA) found that employment in the oilfield services and equipment (OFS) sector fell by nearly 15,000 jobs in May, bringing total job losses due to pandemic-related demand destruction to more than 84,000. OFS employment is down 105,000 jobs from May 2019 and now stands at its lowest point since 2016.
17 Oil and gas company Ovintiv, formerly Encana, laying off workers across North America
https://www.cbc.ca/news/business/ovintiv-encana-layoffs-1.5616174
Oil and gas producer Ovintiv, which moved its headquarters from Calgary to Denver last year and changed its name from Encana, says it is laying off workers across North America.
A spokeswoman for Ovintiv said the layoffs come as the company reduces its drilling activity in both Canada and the United States.
18 M&A Top and total deals revealed
https://www.offshore-technology.com/deals-analysis/oil-gas-industry-deals-in-may-2020/
The value marked a decrease of 20.4% over the previous month and a drop of 81% when compared with the last 12-month average of $21.85bn.
In terms of number of deals, the sector saw a drop of 34.4% over the last 12-month average with 120 deals against the average of 183 deals.
In value terms, North America led the activity with deals worth $2.65bn.
19 U.S. Is The Surprising Winner In China’s LNG Market
https://oilprice.com/Energy/Natural-Gas/US-Is-The-Surprising-Winner-In-Chinas-LNG-Market.html
The natural gas market is reeling from the triple whammy of a stubborn supply overhang, particularly in the Asia-Pacific region–which accounts for nearly two-thirds of global demand–a mild winter, and a hobbled global economy. China has emerged as a rare bright spot as energy demand in the country remains relatively high. However, Beijing is taking advantage of the health and economic crisis to do a dramatic overhaul of its natural gas supply chains.
20 BP raises nearly $12 billion in first hybrid bonds issue
https://www.reuters.com/article/us-bp-fundraising-bonds-idUSKBN23P1OU
BP on Wednesday raised $11.9 billion in multiple currencies, a spokeswoman told Reuters in an emailed statement, tapping for the first time hybrid bonds which place less strain on the balance sheet as the principal is not required to be repaid.
BP raised $5 billion, 4.75 billion euros ($5.34 billion) and 1.25 billion pounds ($1.56 billion) in the United States, Europe and the United Kingdom, respectively, according to data.
21 Oil Markets May Not Fully Recover Until 2022
https://oilprice.com/Energy/Energy-General/Oil-Markets-May-Not-Fully-Recover-Until-2022.html
Oil demand may not recover to pre-pandemic levels until 2022 at the earliest, according to a new report from the International Energy Agency (IEA).
The surplus of crude oil sloshing around the world has narrowed quicker than expected, owing to a severe drop in supply and a quick rebound in demand in some parts of the world after a record drop in consumption.
22 Aviation crisis means oil demand to stay below pre-virus levels before 2022: IEA
https://www.reuters.com/article/us-iea-oil-idUSKBN23N13B
Oil demand is recovering from the greatest fall in its history in 2020, the International Energy Agency (IEA) said on Tuesday, but less flying due to coronavirus fears means the world will not return to pre-pandemic demand levels before 2022.
“Our first forecast for 2021 as a whole shows demand growing by 5.7 million barrels per day (bpd), which, at 97.4 million bpd, will be 2.4 million bpd below the 2019 level,” the IEA said in its monthly report.
