Home / Oil & Energy / Oil & Companies News / Petchems demand for crude remains buoyant, US output rises sharply as prices boom

Petchems demand for crude remains buoyant, US output rises sharply as prices boom

Demand for crude oil from the petrochemicals sector remains buoyant, but all subsectors are pushing demand higher as the sector recovers from the pandemic-induced slump, the International Energy Agency (IEA) said on Tuesday.

Crude output from the US is set to account for half of the rise in output in 2021 as prices for the commodity have continued their rally.

Crude prices have risen sharply in recent weeks, overall. Crude oil Brent deliveries for January were at $82.57/bbl in European afternoon trading on Tuesday.

Brent prices, the international reference, have risen by more than 15% since 1 September, when prices stood at $71.59/bbl.

However, the tide of booming crude oil prices could be about to turn, according to the Paris-based agency, as a result of rising global supply, much of it coming from the US as high prices incentivise higher-cost producers there to boost activity.

“The world oil market remains tight by all measures, but a reprieve from the price rally could be on the horizon. Contrary to hopes expressed in Glasgow at COP26, this is not because demand is declining, but rather due to rising oil supplies,” it said.

“Following another hefty inventory decline in September, benchmark crude oil prices surged… However, preliminary data and satellite observations of stock changes in October suggest the tide might be turning.”

The IEA said global oil production had risen by 1.4m bbl/day to 97.7m bbl/day during October, with the recovery in output in the US following the hurricane season in the Gulf Coast accounting for half the increase.

A further boost to output to the tune of 1.5m bbl/day is expected over November and December, said the IEA, even as producing cartel OPEC+ “disregarded pleas from major consumers” to ramp up beyond a monthly allocated 400,000 bbl/day to cool prices.

“Over this period, the US is now poised to provide the largest increase in supply of any individual country. We have raised our forecast for the US by 300,000 bbl/day for Q4 and by 200,000 bbl/day on average in 2022,” said the IEA.

“The US is set to account for 60% of 2022 non-OPEC+ supply gains, now forecast at 1.9m bbl/day. Even so, the US will not return to pre-COVID rates until the end of 2022. That increase will go some way to meet rising demand, still recovering from the 2020 COVID slump.”

Demand is set to strengthen further as more countries open up to international travel, mobility levels increase, and vaccination campaigns gather pace globally.

However, the fourth wave of the pandemic in many European countries, coupled with slightly weaker industrial activity and higher oil prices, could temper the demand gains, said the IEA.

One subsector set to continue booming is petrochemicals, with healthy activity within the 38 countries in the Organisation for Economic Co-operation and Development (OECD) and China.

Globally, the IEA said demand for naphtha – a key petrochemicals feedstock – would increase in 2021 by 70,000 bbl/day and by 130,000 bbl/day in 2022.

With the latest data available covering August, the IEA said deliveries for naphtha had risen by 180,000 bbl/day in OECD countries, while liquefied petroleum gas (LPG) and ethane deliveries were up by 120,000 bbl/day and deliveries for jet kerosene were up by 180,000 bbl/day.

In China, crude oil demand has risen sharply year on year up to the third quarter on strong road fuel and petrochemical demand.

“We expect Q4 demand [in China] to be 10,000 bbl/day lower quarter on quarter, with a slowdown in gasoline demand more than offsetting a mediocre recovery in jet kerosene and an increase in naphtha and LPG,” said the IEA.

“Overall demand for 2021 is expected to increase by 1.2m bbl/day year on year and should be 1.5m bbl/day above 2019 levels. Demand in 2022 is expected to rise by 560,000 bbl/day year on year.”
Source: ICIS by Jonathan Lopez, https://www.icis.com/explore/resources/news/2021/11/16/10706263/petchems-demand-for-crude-remains-buoyant-us-output-rises-sharply-as-prices-boom

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping