Lingering Logistics and Tumbling Crude are Bringing Austerity to The Chemical Markets

Crude oil prices rallied on Tuesday on indications that Saudi Arabia and Russia will agree to induce output cuts at a video meeting on Thursday, 9^th April. As per the recent reports from the Russian state-run media outlet TASS, representatives from the U.S., Canada, U.K., Brazil, Norway, Argentina, Columbia, Egypt, Indonesia, Chat and Trinidad and Tobago are invited to the virtual OPEC meeting.

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Moreover, the rebound in the oil prices is further supported as oil majors Exxon Mobil (XOM) and the Dow Jones anticipate a significant decline in their capital expenses. Analysts predict that even if the two agree for a huge cut of 10 million bpd, the demand loss would be much lesser than what has been expected in Q2 20202 and  would bring stability to the oil market which has been tumbling since the onset of the oil-price war. Oil prices spiked on Tuesday, with WTI Crude surging by 1.00% at $26.36 and Brent Crude remained at $25.51 as of 10:21 a.m. CST.

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Mixed xylene prices have tumbled to record lows in the month of April as global markets face repercussions of severe crude war and COVID-19. A significant reduction in trade flows could be observed post the outbreak of the pandemic which has weighed heavily over the global supply-chains. Moreover, curtailed operations in the manufacturing sectors to control the spread of the virus has further created a huge dent in the global petrochemicals demand outlook. Weakened crude post the crude-oil price war has further made the market lengthier crashing the downstream sector to record several year lows in terms of pricing since the month of March.

Key Headlines

·         Oil prices rebound on hopes for a positive outcome during Saudi-Russia meeting

·         Asian refiners cut operating rates as demand collapses further

·         Exxon to reduce it capital expenditure by 30% to adapt to falling crude

·         KNPC announces completion of biofuel project at Al-Ahmadi refinery

Exolon Group expands production of polycarbonate and polyester sheets

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Source: ChemAnalyst