MH Daily Bulletin: December 1

December 1, 2022 • Posted in Daily Bulletin

News relevant to the plastics industry:

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Supply

  • Oil rose 3% Wednesday on expectations of greater demand in China, where two major cities modestly eased some COVID-19 curbs.
  • In afternoon trading today, WTI futures were up 1.3% at $81.56/bbl, Brent was up 0.4% at $87.28/bbl, and U.S. natural gas was down 2.6% at $6.75/MMBtu.
  • The U.S. is reportedly weighing more releases from strategic crude reserves if prices spike following Europe’s ban on Russian oil imports.
  • U.S. crude stocks fell by the most in three years last week, according to the Energy Information Administration.
United States Crude Oil Stocks Change
  • U.S. oil output climbed 2.4% to 12.27 million bpd in September, the highest of the pandemic.
  • The White House is considering steps to double heating oil reserves in the Northeast this winter as the region faces the country’s worst shortage of fuels.
  • OPEC’s production fell by more than 700,000 bpd from October to November after the alliance pledged steep output cuts to support prices.
  • Venezuela wants the U.S. to ease even more sanctions on the country’s beleaguered oil industry after Chevron gained its first license to operate there in years.
  • Australia’s No. 1 independent gas producer warned of mounting cash-flow issues as it struggles to pass environmental checks needed to boost drilling. 
  • More oil news related to the war in Europe:
    • The EU Commission is recommending that member states adopt a price cap on Russian oil of $60/bbl. The cap must be agreed upon by all 27 EU member countries as well as the G-7.
    • Russian crude production could fall by 2 million bpd to start 2023 as tighter sanctions take hold, according to the International Energy Agency.
    • Europe’s LNG imports from Russia are up 40% over the past year, a sharp contrast to the bloc’s purchases of sanctions on Russian coal and crude.
LNG in Europe: Ready or Not?
  • The U.S., which this year surpassed Australia and Qatar to become the world’s largest LNG exporter, will see export capacity increase 40% by 2025 from current expansion projects.
The Biggest Liquefied Natural Gas Exporters

Supply Chain

Domestic Markets

  • The U.S. reported 109,986 new COVID-19 infections and 567 virus fatalities Wednesday.
  • Up to 30% of Americans who contract COVID-19 also develop long-haul symptoms, U.S. health officials say. The economic impact of long-COVID could eventually total $3.7 trillion, according to one estimate.
  • COVID-19 mortality rates among young adults rose sharply in 2021 as the demographic got fewer vaccines and took fewer precautions than other age groups.
  • Wednesday comments from the chair of the Federal Reserve suggest the central bank will slow its pace of interest-rate hikes to 50 basis points at the next meeting in December. U.S. stocks surged on the news.
  • Varied data released Wednesday painted a mixed picture of the U.S. economy in recent months:
    • Third-quarter GDP rose at a 2.9% pace, higher than the 2.6% initially reported.
    • Personal consumption, the biggest component of the U.S. economy, climbed a higher-than-expected 1.7% in the third quarter on greater outlays for services.
    • The personal consumption expenditures price index, one of two key inflation gauges preferred by the Fed, rose 4.6% in the third quarter.
    • Pretax corporate profits fell 1.1% in the third quarter, the first decline since 2020.
    • The U.S. trade deficit in goods widened by 7.7% in October to $99 billion, the most since June.
    • The Fed’s “Beige Book” of financial anecdotes suggests U.S. economic growth eased this fall as companies became more downbeat in their outlook.
    • U.S. job openings fell from 10.7 million in September to 10.3 million in October, a hopeful sign for the Fed’s effort to curb demand.
United States Job Openings
  • U.S. private payrolls added just 127,000 positions in November, nearly half of October’s gain, according to ADP.
United States ADP Employment Change
  • U.S. pending home sales fell for a fifth straight month in October as higher mortgage rates slowed demand.
  • U.S. apartment rents dropped 1% in November, the steepest decline in five years.
  • The number of U.S. shoppers choosing to shop at physical stores over Thanksgiving weekend surged 17% from a year ago.
  • Amazon says it recorded its biggest ever Thanksgiving shopping weekend but did not release specific data.
  • General Electric and defense contractor L3Harris are among companies vying to acquire rocket-maker Aerojet Rocketdyne, according to reports.
  • Hormel Foods’ sales fell 5% last quarter on a pullback in demand for refrigerated goods.
  • The New York Stock Exchange’s proceeds from initial public offerings are down 93% this year as market volatility dissuades companies from going public.

International Markets

South Korea Exports YoY
  • India’s GDP rose at a 6.3% pace in the latest quarter, less than half the growth of the previous three months.
  • Russia’s economy reportedly shrank 1.7% year over year from January to September, withstanding the impact of Western sanctions better than initially expected.
  • Sweden’s H&M, the world’s No. 2 fashion retailer, is laying off over 1,500 employees as part of efforts to cut $190 million in costs per year.

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