Oil gains on hopes over Saudi Arabia-Russia deal; Asia petrochemical shares mixed

SINGAPORE (ICIS)–Crude oil prices rose by more than $1/bbl on Thursday after US President Donald Trump said that he was confident that Saudi Arabia and Russia will soon resolve their dispute over a market flooded with supply.

At 03:03 GMT, Brent crude was up by about 6%, while US WTI jumped by around 5%.

	Last change	Change	Net change	Close	High	Low
Brent	26.19	5.86%	1.45	24.74	26.23	25.45
US WTI	21.28	4.78%	0.97	20.31	21.47	20.76

Trump in a press conference overnight said that he has spoken to Saudi Arabia and Russia leaders and expects them to soon work out their price war, which sent oil values plummeting to 18-year lows amid a slump in demand from the coronavirus pandemic.

The US Energy Information Administration on Wednesday reported a crude inventory jump of 13.8m barrels for the week ended 27 March versus an expected increase of just 4.5m barrels; while gasoline inventories increased by 7.5m barrels, a reflection of a collapse in oil consumption in the world’s largest economy.

The Paris-based International Energy Agency (EIA) in a report on 1 April said that the shocks to oil markets from the coronavirus pandemic will be felt throughout global supply chains and ripple into other parts of the energy sector.

“With 3 billion people around the world under some form of lockdown because of the coronavirus, one of the traditional stabilisers for the oil market is missing,” it said.

“Low prices usually stimulate a reaction from consumers, but such a boost to demand is highly unlikely this time around, at least for the duration of the global health emergency.

“Instead, a rapid build-up of oil stocks is starting to saturate available storage capacity, pushing down prices further,” the IEA said.

As of 1 April, there are a total of 827,419 confirmed cases of the coronavirus across 205 countries/territories/areas, with 40,777 deaths reported, according to the latest data from the World Health Organization (WHO).

“Oil prices now very likely heading to $10/bbl or below. Rising storage costs could quite literally mean that people will pay other people to take crude away,” ICIS senior Asia analyst John Richardson said.

“Stock markets and oil prices will continue to rally during some trading sessions on new stimulus,” he said.

ASIA PETROCHEMICAL SHARES MIXED
Asian petrochemical shares were mixed while regional stock indices were mostly lower on worries that the US economy will be shut down longer than expected as confirmed coronavirus cases in the country topped 200,000.

Company/Stock Exchange (as of 03:03 GMT)	% Change
Nikkei 225 (Japan)	-0.85%
Asahi Kasei Corporation	-0.76%
JXTG Holdings, Inc.	0.36%
Mitsubishi Chemical Holdings Corporation	0.00%
Mitsui Chemicals, Inc.	-2.03%
Hang Seng Index (Hong Kong)	-0.15%
Sinopec Shanghai Petrochemical Company Limited	0.00%
PetroChina Company Limited	4.30%
KOSPI Composite Index (South Korea)	1.33%
OCI Company Ltd	2.09%
SK Innovation Co., Ltd.	5.58%
LG Chem, Ltd.	-2.40%
Lotte Chemical Corporation	-2.46%
Hanwha Corporation	0.66%
STI Index (Singapore)	-0.80%
Wilmar International Limited	2.51%
Olam International Limited	-2.08%
FTSE Bursa Malaysia KLCI (Malaysia)	0.61%
SSE Composite Index (Shanghai, China)	0.33%
Jakarta Composite Index (Indonesia)	0.72%
PT. Chandra Asri Petrochemical Tbk	6.67%

Source: Yahoo Finance

The US has the highest count of coronavirus infection globally. Trump earlier this week extended his stay-at-home guidelines for the country until the end of April.

Japan’s Nikkei 225 Index was down by 0.85%, while South Korea’s KOSPI was up by 0.95%.

Hong Kong’s Hang Seng Index slipped by 0.15%.

Taiwan’s financial markets are closed because of a public holiday.

“Nobody has a clue about when the virus will be brought under control and the level of confusion about the outcomes is something that none of us have experienced before,” ICIS’ Richardson said.

“Hopes will be raised and dashed. This will feed into the volatility in stock and so oil and so therefore chemicals markets,” he added.

Overnight, US-listed chemical stocks fell with the rest of the market on Wednesday as the Dow Jones Industrial Average fell by 4.44%.

Focus article by Nurluqman Suratman

Additional reporting by Pearl Bantillo

Visit the ICIS Coronavirus topic page for analysis of the impact on chemical markets and links to latest news.