Friday, August 7, 2020
Energy Petrochemicals and Plastics 76
1 Oil slips below $45 on demand concerns, set for weekly rise
https://www.reuters.com/article/us-global-oil-idUSKCN2530BI
Oil dipped below $45 a barrel on Friday on worries that a demand recovery would slow due to a resurgence of coronavirus cases, although a pledge from OPEC member Iraq to cut oil output further in August provided support.
The resurgence of infections remains a key issue for the market and demand outlook. Tallies show cases in the United States are rising in a number of states. India reported on Friday a record daily jump in infections.
Brent crude LCOc1 fell 51 cents, or 1.1%, to $44.58 by 1209 GMT. U.S. West Texas Intermediate (WTI) crude CLc1 also slipped 51 cents, or 1.2%, to $41.44. Both benchmarks are set for weekly gains of more than 2%.
2 Exxon: 20 Percent Of Global Oil And Gas Reserves May Be Wiped Out
https://oilprice.com/Latest-Energy-News/World-News/20-Of-Global-Oil-Gas-Reserves-Could-Be-Wiped-Out-If-Crude-Prices-Dont-Recove.html
After a grim Q2 season for Big Oil, the world’s third-most valuable energy company is warning that 20% of the world’s oil and gas reserves may no longer be viable, according to Bloomberg.
According to Exxon Mobil, one-fifth of the world’s oil and gas reserves will no longer qualify as “proved reserves” at the end of this year if oil prices fail to recover before then.
A flurry of oil and gas companies have written off billions in oil and gas assets as the value of those assets in the current oil price climate is no longer what it once used to be. Exxon was not among them.
3 Weekly Resin Report: PE Supply/Demand Balance Tightens
https://www.plasticstoday.com/resin-pricing/weekly-resin-report-pe-supplydemand-balance-tightens
In early July, as more and more US manufacturers ramped back up after being shut down because of the pandemic, they went shopping for resin to process. Whether they knew it or not, they were competing with international buyers for available US supply. Despite a price increase for export resin, super-strong demand quickly soaked up general allotments, and producers were essentially sold out of export material by mid-month, according to the PlasticsExchange. The early strong sales boost provided producers with confidence to firmly pursue their domestic July price increases. This included $0.05/lb for polyethylene (PE) and, with PGP monomer costs quickly escalating, a similar cost-push hike for polypropylene (PP). Some incredulous processors only picked away or outright passed on early-month offerings,
4 Asia shrugs off OPEC supply rise amid crippled demand
https://blogs.platts.com/2020/08/07/asia-refiners-opec-sour-crude-supply/
Middle Eastern sour crude supply is expected to increase this month after OPEC+ members on July 15 agreed to pare back their production cut commitment. But Asian consumers, who under normal circumstances would have welcomed the move, have barely taken notice.
It remains to be seen where all this excess oil will eventually end up as Asian buyers grapple with crippling demand and have to tweak refining strategies to minimize losses.
5 Russia’s SIBUR bullish on H2 despite pandemic eroding demand
https://www.icis.com/explore/resources/news/2020/08/07/10538565/russia-s-sibur-bullish-on-h2-despite-pandemic-eroding-demand
SIBUR’s outlook for its petrochemicals business is bullish for the second half of the year if a second wave of coronavirus infections is avoided, the Russian producer said this week.
“This is apparently when we hit the bottom. At the end of the second quarter, early in the third quarter we see improvements in spreads as well as demand,” said SIBUR executive director Sergey Komyshan.
“If we do not see any significant second wave of the pandemic, then we should be able to come back to levels in terms of margins that we saw before, but that will be very uneven among different regions.”
6 Iraq Commits to Deep Oil Cuts
https://www.rigzone.com/news/wire/iraq_commits_to_deep_oil_cuts-07-aug-2020-162956-article/
Iraq made its strongest commitment yet to implement deep cuts in crude production after the country’s oil minister and his Saudi counterpart held a phone call Thursday.
OPEC’s second-biggest producer — and a long-time laggard in meeting oil-output quotas — has faced mounting pressure to boost its compliance as the group’s patience wears thin. The country failed to meet its production-cut target in May and June, and removed just 11,000 barrels a day last month, according to tanker-tracking data compiled by Bloomberg.
7 Global Natural Gas Demand Set For Long-Term Growth After COVID
https://oilprice.com/Latest-Energy-News/World-News/Global-Natural-Gas-Demand-Set-For-Long-Term-Growth-After-COVID.html
The world’s consumption of natural gas is set to decline by 4 percent this year, but global demand will return to growth after the pandemic, thanks to low natural gas prices and stricter environmental policies, a new report showed on Thursday.
The Global Gas Report 2020 – published by the International Gas Union (IGU), research company BloombergNEF (BNEF), and Italian gas infrastructure firm Snam – says that the trend of increased natural gas demand due to environmental concerns, which was already underway before the pandemic, will continue after COVID-19 is under control.
8 U.S. weekly LNG exports dip
https://www.offshore-energy.biz/u-s-weekly-lng-exports-dip-3/
The United States Energy Information Administration (EIA) noted that a total of five LNG cargoes have been shipped during the week ending August 5.
The five tankers had a combined LNG-carrying capacity of 18 Billion cubic feet (Bcf) of the chilled fuel. This compares to seven cargoes with a combined LNG-carrying capacity of 25 Bcf.
Cheniere’s Sabine Pass LNG facility shipped three cargoes with one cargo each added by its Corpus Christi plant and Sempra’s Cameron LNG facility.
9 COVID-19’s impact on commercial jet fuel demand has been significant and uneven
https://www.eia.gov/todayinenergy/detail.php?id=44676
Efforts to contain the 2019 novel coronavirus disease (COVID-19) have dramatically changed global commercial passenger flight volumes. These flights averaged a little more than 70,000 flights per day in January and February, fell to an average of less than 25,000 flights per day in April, and then started to increase again in May. Commercial jet fuel consumption showed a similar pattern, falling from an average of 4.3 million barrels per day (b/d) in January and February to 1.0 million b/d in April.
10 Exclusive: BP poised to sell ‘stranded assets’ even if oil prices rally
https://www.reuters.com/article/us-bp-assets-transition-exclusive-idUSKCN2530GY
BP (BP.L) is preparing to sell a large chunk of its oil and gas assets even if crude prices bounce back from the COVID-19 crash because it wants to invest more in renewable energy, three sources familiar with BP’s thinking said.
The strategy was discussed at a BP executives meeting in July, the sources said, soon after the oil major lowered its long-term oil price forecast to $55 a barrel, meaning that $17.5 billion worth of its assets are no longer economically viable.
11 China Is Using The Pandemic As An Excuse To Not Buy U.S. Energy
https://oilprice.com/Energy/Energy-General/China-Is-Using-The-Pandemic-As-An-Excuse-To-Not-Buy-US-Energy.html
Back in June, we reported that China had begun ramping up imports of U.S. LNG ostensibly in a bid to fulfill the January trade agreement with Washington and possibly avert another full-blown trade war.
According to Wood Mackenzie via NGI, China took in 10 LNG cargoes from U.S. suppliers between April and May at the expense of its traditional suppliers, including Turkmenistan and Uzbekistan.
But it’s now emerging that the LNG purchases could have been a mere smokescreen.
12 Oil Prices Soar After EIA Reports Large Crude Draw
https://oilprice.com/Energy/Crude-Oil/Oil-Prices-Soar-After-EIA-Reports-Large-Crude-Draw.html
A week after it reported the heftiest crude oil draw in more than six months, the Energy Information Administration once again had good news for oil bulls: the authority said crude oil inventories had shed 7.4 million barrels during the week to July 31.
A week earlier, the EIA said inventories had lost as much as 10.6 million barrels, after a build of 4.6 million barrels for the second week of July. Analysts had expected an inventory decline of 3.267 million barrels for the week to July 31.
13 End juicy deals: Mexican president sets out state-centric energy vision
https://www.reuters.com/article/us-mexico-oil-idUSKCN25021W
The eight-page memorandum seen by Reuters broadly reflected what Lopez Obrador has said publicly since taking office in December 2018, but gave notice of his intention to roll back the market liberalization carried out in 2013-14 under the last government.
An official confirmed the authenticity of the document dated July 22, which said the government would “put a stop to juicy private deals at the cost of bad public business.” The document was addressed to officials at the country’s energy regulators.
14 U.S. Shale Faces Another Round Of Bankruptcies
https://oilprice.com/Energy/Crude-Oil/US-Shale-Faces-Another-Round-Of-Bankruptcies.html
More than thirty billion dollars: this is the size of the collective debt of oil and gas companies that filed for bankruptcy protection in the first half of the year. That is 23 companies, all but five of which filed during the second quarter when Covid-19 really took hold. Now, with the resurgence of new cases and an equal resurgence in doubts about the outlook for oil demand, more filings are on the way.
“It is reasonable to expect that a substantial number of producers will continue to seek protection from creditors in bankruptcy even if oil prices recover over the next few months,” Haynes and Boone said in its June report on oil and gas bankruptcies. The reasons: lukewarm oil demand improvement and even more lukewarm economic improvement. Until economies return to normal, the law firm noted, the situation for oil and gas is unlikely to book any marked improvement.
