Crude Oil and Refining: Quarter four performance

Average Brent crude oil prices eased US$4/bbl from Q3 to average US$76/bbl in October and November. The relatively shallow trend masked short-term volatility as prices ranged from US$70/bbl in early November to over US$81/bbl in early October. Oil prices remained subject to contradictory trends as geopolitical conflict and retention of OPEC+ supply cuts exerted upward pressure alongside worries over fragile economies headed by China pushing prices down. The softer economic outlook won out as prices gradually declined, despite significant geo-political events concentrated in Middle East.

Brent crude oil prices jumped over US$10/bbl to approach US$81/bbl in early October following missile attacks by Iran against Israel. Prices subsequently declined to negative pressure from soft demand, expectation that OPEC+ would roll back production cuts, and resumption of appreciable crude output in Libya. Brent crude ended the month close to its opening price point at US$71/bbl as steady supply in Middle East relaxed risk premium.

Brent crude prices were more stable in November and oscillated between US$71/bbl and US$75/bbl. Principal developments included a conclusive Republican victory in the US Presidential election campaign, bringing expectations of a new administration that will see increasing US oil and gas production, as higher priority in 2025. Weakening demand in China and softening consumption in other large emerging markets held prices within a smaller and lower range than in previous months.

Economic weakness remained a key concern in December and offset renewed supply side fears following return of civil conflict in Syria. OPEC+ delayed scheduled withdrawal of cuts to crude supply by three months to April 2025. The announcement reflected concerns over weak demand and increasing production from other sources and may not be the final delay to the removal of its supply cuts. Sudden fall of the Syrian Assad regime had little influence on market sentiment and Brent settled near US$74/bbl. Prices approached the three year low found in September.

Cost of petrochemical feedstocks sourced from the refinery lagged easing crude oil prices as weak petrochemical demand had previously depressed naphtha values. Seasonal heating demand narrowed cost competitiveness of LPG relative to naphtha. The demand led downturn in crude oil prices offered little relief to refinery margins which settled at lower end of range achieved over last three years.

Find out more...

Quarterly Business Analysis: Petrochemicals, Polymers and C1 Chemicals - Q4 2024

The Quarterly Business Analysis provides key insight into production economics for a broad range of commodity petrochemicals, polymers and C1 chemicals.  The analysis presents a review of costs, prices and margins for typical production assets, providing a valuable view of regional and value chain competitiveness and is is available for each key price setting region - Asia Pacific, Middle East, Western Europe and the United States.  A quarterly report provides insightful commentary to illustrate current trends, related to recent market developments.  The accompanying database is updated monthly.

About Us - NexantECA, the Energy and Chemicals Advisory company is the leading advisor to the energy, refining, and chemical industries. Our clientele ranges from major oil and chemical companies, governments, investors, and financial institutions to regulators, development agencies, and law firms. Using a combination of business and technical expertise, with deep and broad understanding of markets, technologies and economics, NexantECA provides solutions that our clients have relied upon for over 50 years.