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Crude oil drops below $50/bbl on supply glut

Industry News 02:56PM Mar 15, 2017 Source:scrapmonster


ScrapMonster Contributor

SEATTLE (  WTI declined below $50/bbl on Thursday. OPEC and its partners have seen the post-agreement oil rally evaporate as the U.S. inventory glut becomes impossible to ignore.

Oil prices dropped to their lowest in three months on Monday despite OPEC efforts to curb crude output, dragged down as U.S. drillers kept adding rigs.

Saudi energy minister Khalid Al-Falih said Tuesday that an extension of the six-month OPEC/non-OPEC agreement to cut crude output will not be considered until May and will be based on levels of both conformity to the deal by participating countries and on global inventories.

Players in global markets reported reduced PVC supplies from the US owing to the turnarounds and better domestic demand. Accordingly, export prices out of the US were pronounced higher although buyers are resisting higher prices despite the tightness.

North American prices for solid polystyrene, ABS and PET bottle resins all have increased since February 1.

According to The Plastics Exchange, commodity resin prices rose a cent across the board, as suppliers raised their levels amid March price increase efforts.  

The PE sentiment in China shifted following the end of the Chinese New Year due to a number of factors including high stock levels, unsatisfactory demand and softening in the futures market whereas European PE prices were driven higher by strong demand, limited supplies and firm feedstock costs.

Polypropylene (PP) import prices in southeast (SE) Asia halted eight consecutive weeks of gains, with upside likely to be limited as buying appetite in the key China market has failed to pick up, market players said on Tuesday.

Polyethylene terephthalate (PET) prices in Latin America increasing for March, driven by higher feedstock costs and the earlier rising trend in other regions, particularly in the US and Asia, regional sources said on Tuesday.

Negotiations on European polyvinyl chloride (PVC) prices for March delivery into the CIS markets began last week with producers announcing a further price increase because of higher ethylene prices and limited export quotas, according to an ICIS-MRC Price Report.

Despite the March contract price for ethylene in Europe being agreed up by €30/tonne from February, some European polyethylene (PE) producers raised their export prices more significantly than the increase in monomer prices, according to an ICIS-MRC Price Report.

The export price for polypropylene from Europe producers to CIS countries was agreed up €70/tonne in most cases, above the €50/tonne rise for propylene this month, according to the ICIS-MRC price report.

Middle Eastern PP and PE producers approached the African markets with March price increases as was already expected. Players in regional markets, including Kenya, Tunisia, Nigeria and Algeria attributed higher announcements to generally limited supplies on the part of suppliers.

Ethylene prices in some parts of Asia inched down on Monday. CFR South East Asia prices of ethylene were assessed down at the USD 1130/mt mark, a fall of USD 10/mt from last Friday’s assessed levels.

A Polymerupdate source in India informed that the new ethane-based PE plant of Reliance Industries is expected to commence commercial production in May 2017.

A Polymerupdate source in China informed that Lanzhou Petrochemical commenced a brief maintenance at the Chinese LDPE plant on March 6, 2017. The plant is expected to resume production by this weekend.

A Polymerupdate source informed that the cracker and both PE and PP plants of Reliance Industries are likely to be shut on March 23, 2017 for a maintenance turnaround. Both the plants are expected to remain off-stream for around 25 days.


Key Words:  Oil prices