[ad_1]
All eyes on the OPEC + meeting as markets await the group’s decision on the extension of the oil production cut
This week: Uncertainties surround winter demand for LNG, metals players must follow suit from China’s manufacturing data, and talks on toluene terms for 2021 are ongoing.
But first, Asia, home to the world’s largest crude buyers, will focus on the OPEC + ministerial meeting on December 1, where the discussion will focus on current market conditions and the group’s coordinated action in 2021.
The decision taken at this meeting will guide crude prices. Brent crude prices have approached $ 50 / b in recent days, the highest levels since March.
In mid-November, an advisory panel of delegates recommended delaying the group’s supply increase for up to six months, given the strong consensus view that the increase in COVID-19 cases in many Western countries and the reactivation of production of Libyan crude oil will put pressure on oil prices early next year.
At the same time, vaccines in development have shown strong preliminary test results. This raises hopes that the pandemic will end demand for oil if injections are widely available in 2021.
So, here is our social media poll question of the week. Will OPEC + extend the production cut in the first half of 2021? Share your thoughts on social media with the PlattsMM hashtag.
Still on oil, Beijing is expected to release the first batch of 2021 oil import and export quotas soon.
The allocation of the crude import quota will give an indication of China’s appetite for crude oil in the first months of next year. The Commerce Ministry has raised the limit volume of the import quota by 20% to 243 million tonnes by 2021 from this year, setting an upward tone.
But questions surround export quota trends for gasoline, diesel and jet fuel, as more than 10 million metric tons of allocations are unlikely to be used this year due to lower global demand.
Now, a decent report on China’s November manufacturing data could boost sentiment and provide more buying confidence in the metals and commodities space. Iron ore prices shipped by sea have returned to around $ 130 per metric ton CFR China. Restocking and some supply shortages could further support prices this week.
Tensions between China and Australia over coal imports have escalated, leaving millions of tons of Australian coal on ships leaving Chinese ports without landing.
Australian thermal coal, on the other hand, could have strong demand from India and Japan amid supply problems from other high-CV coal sources such as Russia and Colombia.
In Indonesia, Kalimantan thermal coal prices could maintain their optimistic momentum thanks to a series of Chinese offshore acquisitions with additional import quotas released for the remainder of 2020.
In LNG, winter demand is in focus after spot prices rose last week due to supply disruptions.
South Korea’s demand for and imports of LNG could get a boost from Seoul’s announcement that between 9 and 16 coal-fired power plants will be closed in the country from December 1 to February 28 to reduce pollution during the winter period.
South Korea and Japan expect below-average to average temperatures this winter. Colder weather traditionally supports LNG consumption, but a resurgence of a pandemic in both countries could dampen demand.
In petrochemicals, toluene producers in the Far East are competing for higher premiums next year. This is primarily a reaction to the Taiwan CPC sealing higher levels at 20 per metric ton versus Platts FOB Korea’s toluene assessment for 2021 forward supply. BUT traders were reluctant, resulting in a stalemate in talks about the term. The FOB Korean physical price of toluene rebounded to $ 446 per metric ton on November 26, posting the strongest level in eight months.
And finally, in shipping, rates on some East Asian routes are expected to hit a new high in a month, as China is expected to ship one million barrels a day of refined products abroad.
At a time when refineries in East Asia are cutting production due to low margins and sourcing required products from elsewhere, this implies that those Chinese kegs can reach Singapore, Japan and South Korea and support transportation. clean from tankers.
Thank you for starting your Monday with us. Stay safe and have a great week ahead!
