Friday, July 17, 2020
Energy Petrochemicals and Plastics 73
1 OPEC+ hits the refinery wall
https://www.reuters.com/article/us-global-oil-kemp-idUSKCN24I1UD
Fuel traders and refiners are becoming more pessimistic about the outlook for the global economy and transportation for the rest of this year, even as the crude producers in OPEC+ try to push oil prices higher.
OPEC+ is anxious to see higher crude prices as soon as possible but its ambition is likely to be thwarted in the short term by the renewed softness in fuel consumption.
Price premiums for gasoline and diesel over crude have been flat or falling for almost four weeks since June 23 amid growing anxiety about a resurgence in the coronavirus and a new round of lockdowns.
2 Oil Retreats from High on OPEC+ Taper
https://www.rigzone.com/news/wire/oil_retreats_from_high_on_opec_taper-16-jul-2020-162736-article/
Oil retreated from a four-month high after the OPEC+ alliance confirmed it would start tapering output cuts from next month.
Futures in New York dropped below $41 a barrel after jumping 2.3% on Wednesday. Saudi Arabia and Russia said the producer bloc would proceed with its plan to add more supply next month and were confident that it wouldn’t hurt oil’s rally. The tapering will be partially offset by reduced production from some countries that didn’t meet their targets in previous months.
3 Weekly Resin Report: PE, PP prices continue to tick higher
https://www.plasticstoday.com/resin-pricing/weekly-resin-report-pe-pp-prices-continue-tick-higher
Spot resin trading maintained a swift pace last week. Demand was very good and supply remained constrained, yet available, reports the PlasticsExchange in its Market Update. Prices continued to tick higher, as all commodity polyethylene (PE) and polypropylene (PP) grades added another $0.005/lb last week. Processors absorbed the June $0.04/lb PE increase in stride and the upward momentum has been sustained into July, which now brings the next $0.05/lb increase currently on the table into focus.
4 Russia’s Sibur to cut Baltic LPG exports to five-year lows: traders, data
https://www.reuters.com/article/us-russia-sibur-lpg-exports-idUSKCN24H2IU
Russia’s Sibur is set to reduce liquefied petroleum gas (LPG) shipments from its main Baltic Sea export hub to their lowest in five years this month as global oil output curbs led to shortages at its plants at home, traders said and data showed.
Moscow has cut its oil output by nearly 2 million barrels per day to 17-year lows as part of a supply pact agreed with the Organization of Petroleum Exporting Countries to bolster the market.
5 Reliance’s $15 billion stake sale deal with Aramco delayed
https://www.reuters.com/article/us-reliance-agm-energy-idUSKCN24G1W6
Reliance, operator of the world’s biggest refining complex, last year announced a $15 billion deal with the world’s top oil exporter Aramco as part of the Indian company’s efforts to cut its debts.
“Due to unforeseen circumstances in the energy market and the Covid-19 situation, the deal (with Saudi Aramco) has not progressed as per the original timeline,” Mukesh Ambani told shareholders on Wednesday.
6 Canada’s oil production drops to its lowest level since 2016 wildfires
https://www.eia.gov/todayinenergy/detail.php?id=44396
Canada was the world’s fourth-largest producer of petroleum and other liquids in 2019, but in the first half of 2020, Canada’s production declined 20% from its 2019 average of 5.5 million barrels per day (b/d). Canada’s production of petroleum and other liquids declined as a result of low global crude oil prices, reduced demand for crude oil for refined petroleum products in Canada and the United States, and continued production curtailments imposed by the government of Alberta—the province where more than 80% of Canada’s 2019 crude oil production was located.
7 Oil and gas drilling set for at least a 20-year low in 2020, unlikely to recover to 2019 levels soon
https://www.rystadenergy.com/newsevents/news/press-releases/oil-and-gas-drilling-set-for-at-least-a-20-year-low-in-2020-unlikely-to-recover-to-2019-levels-soon/
The COVID-19 pandemic has stymied oil and gas activity, a phenomena which has now affected the drilling market both in terms of wells drilled and in terms of related demand for drilling equipment. A Rystad Energy analysis shows the number of drilled wells globally is expected to reach around 55,350 this year, the lowest since at least the beginning of the century.
The decline is a staggering 23% fall from 2019’s number of 71,946 wells.
8 Beyond COVID-19: The next normal for packaging design
https://www.mckinsey.com/industries/paper-forest-products-and-packaging/our-insights/beyond-covid-19-the-next-normal-for-packaging-design
The COVID-19 pandemic has reshaped the megatrends buffeting the $900 billion-a-year packaging industry. As the world manages through—and begins to emerge from—the great public-health and economic crisis, we expect these megatrend shifts to change packaging design in fundamental ways.
To prepare for these changes and the move to the next normal, packaging companies must rethink packaging design beyond “must-haves,” such as reasonable costs, convenience, and performance. Three major requirements must be addressed: first, a good sustainability narrative; second, design with hygiene in mind, given recent heightened consumer-safety concerns; and third, design for e-commerce, ship-ready design, and direct-to-consumer models.
9 Shaping the new normal for packaging beyond COVID-19
https://www.mckinsey.com/industries/paper-forest-products-and-packaging/our-insights/shaping-the-next-normal-of-packaging-beyond-covid-19
While people were adjusting their lives in response to the coronavirus pandemic, the crisis was triggering multiple market disruptions. These disruptions will have both short- and long-term ramifications for the global packaging industry, which generates $900 billion a year. The biggest changes include dramatic shifts in consumer channels, new or heightened hygiene and consumer-safety concerns, highly volatile raw-materials prices, lifted single-use packaging bans, and the disruption of several end markets (such as hospitality and restaurants) by stay-at-home orders. What’s more, we expect the current crisis to reshape existing megatrends in the packaging industry.
10 India bent on seeking alternative to China for petrochemical imports
https://www.icis.com/explore/resources/news/2020/07/16/10530588/india-bent-on-seeking-alternative-to-china-for-petrochemical-imports
Indian customs then relented after implementing the checks not sanctioned by the central government for about 10 days from 22 June, industry sources said.
Nonetheless, government efforts have recently heightened to wean India away from huge Chinese imports following the deadly border clash between the two Asian giants’ troops in Ladakh.
Anti-dumping investigations are underway on more than 100 Chinese products being imported by India.
11 Buffett Sees NatGas Sticking Around for Long Time
https://www.rigzone.com/news/wire/buffett_sees_natgas_sticking_around_for_long_time-16-jul-2020-162740-article/
Warren Buffett’s $9.7 billion bet on natural gas looks even more contrarian today.
As Democrat Joe Biden unveils a staggering $2 trillion clean-energy plan—the most ambitious climate package ever offered by a presumptive presidential nominee—Buffett’s recent deal to buy Dominion Energy Inc.’s natural gas assets is a stark sign he’s expecting that the market’s shift away from fossil fuels won’t happen overnight.
12 OPEC Projects 2021 Surge in Crude Demand
https://www.rigzone.com/news/wire/opec_projects_2021_surge_in_crude_demand-14-jul-2020-162715-article/
OPEC expects demand for its crude oil to rebound sharply next year, surpassing levels seen before the coronavirus crisis, as rival producers struggle to revive output.
The Organization of Petroleum Exporting Countries forecasts the need for its crude will surge by 25% in 2021 to average 29.8 million barrels a day, higher than the level required in 2019, according to a monthly report.
13 Dirty tanker markets face reality check after boom busts
https://blogs.platts.com/2020/07/14/dirty-tanker-markets-oil-freight-volatile/
The tanker markets experienced an extremely volatile second quarter as the coronavirus pandemic threw all oil-related markets off-kilter, with rates on some routes swiveling from record-highs to record-lows in just a matter of months.
But with the oil market gradually rebalancing and the summer lull kicking in, freight rates are likely to stay largely steady and soft in the coming months. And according to S&P Global Platts Analytics, freight rates on the dirty tankers’ market will likely remain under pressure until OPEC+ cuts are reversed.
14 U.S. crude oil and natural gas production in April had biggest monthly decreases in years
https://www.eia.gov/todayinenergy/detail.php?id=44356
Production of crude oil and natural gas decreased in the United States in April 2020 by 670,000 barrels per day (b/d) and 2.6 billion cubic feet per day (Bcf/d), respectively, according to the U.S. Energy Information Administration’s (EIA) Monthly Crude Oil and Natural Gas Production Report. Production declines of that magnitude usually arise only in natural disasters such as hurricanes: the drop in U.S. crude oil production in April was the largest since September 2008 when Hurricanes Gustav and Ike caused production to fall by 1.03 million b/d. The April 2020 decline in natural gas production was the largest monthly decrease since Hurricane Isaac-related shut-ins in August 2012.
15 Canadian firms warn over Mexico energy policy at dawn of trade deal
https://www.reuters.com/article/us-canada-mexico-exclusive-idUSKCN24E2OR
s Mexico celebrated a new trade deal with the United States and Canada on July 1, a group of Canadian energy investors warned their government that Mexico could already be violating the agreement for failing to respect contracts.
In a letter to Canada’s Deputy Prime Minister Chrystia Freeland, Finance Minister Bill Morneau, Foreign Minister Francois-Philippe Champagne and other officials, four companies voiced concern their Mexican investments were under threat and urged the government to press Mexico on the matter.
16 Oil diplomacy and the U.S. presidential election
https://www.reuters.com/article/us-global-oil-kemp-idUSKCN24F1SN
Slower growth in petroleum consumption has intensified competition among the major oil producers and contributed to periodic volume wars and price slumps as they have fought for market share.
For now, the big three producers, Russia, the United States and Saudi Arabia, have reached a truce to stabilise prices during the COVID-19 pandemic and the deepest slump in oil consumption in the industry’s history.
17 When Saudi Arabia Says ‘Jump!’ OPEC Responds ‘How High?’
https://www.forbes.com/sites/thebakersinstitute/2020/07/13/when-saudi-arabia-says-jump-opec-responds-how-high/
Since the disastrous Saudi-Russia price war was called off after five weeks, the cartel has not only righted its own ship, defying yet another round of commentary about its demise, but seems to have fixed global oil markets in the midst of an unprecedented demand collapse – just in time for OPEC’s 60th birthday.
Once recalcitrant OPEC members have suddenly found religion. Not only are they not cheating on quotas, but they are over-complying for good measure, or promising to do so. Led by Saudi Arabia and its Gulf allies producing a million barrels per day less than their quotas, compliance by the two dozen OPEC+ countries with the 9.7mbd in pledged cuts was reportedly 108% in June.
18 Former Pemex boss arrives back in Mexico for graft trial, enters hospital
https://www.reuters.com/article/us-mexico-corruption-idUSKCN24I0MP
A former boss of Mexico’s state oil company Petroleos Mexicanos facing corruption charges that could envelop leaders of the last government was taken to a hospital early on Friday shortly after his overnight extradition to Mexico from Spain.
