Oil to snap three-week losing streak as trade war fears ease

Oil to snap three-week losing streak as trade war fears ease

il prices rose on Friday and were poised to end three weeks of decline, buoyed by rising fuel demand and expectations that U.S. plans for global reciprocal tariffs would not come into effect before April, providing more time to avoid a trade war.

Brent futures were up 59 cents, or 0.8%, at $75.61 a barrel by 1222 GMT. U.S. West Texas Intermediate (WTI) crude gained 47 cents, or 0.7%, to $71.76. Both contracts were on track for weekly gains of about 1%.

U.S. President Donald Trump on Thursday ordered commerce and economics officials to study reciprocal tariffs against countries that place tariffs on U.S. goods and to return their recommendations by April 1.

“Positive development on the trade front in light of U.S. tariff delays paves the way for some recovery in oil prices this morning, as the risk environment warms up to the prospects of further trade consensus being reached,” said IG market strategist Yeap Jun Rong.

“However, gains in oil prices may seem limited as market participants have to digest the prospects of Russian supplies being brought back on the market amid potential Ukraine-Russia peace talks.”

A lifting of sanctions on Moscow in the event of a potential peace deal between Russia and Ukraine is likely to boost global energy supplies.

Trump ordered U.S. officials this week to begin talks on ending the war in Ukraine after Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy expressed a desire for peace in separate phone calls with him.

Russian oil exports could be sustained if workarounds to the latest U.S. sanctions package are found, the International Energy Agency (IEA) said in its latest oil market report.

Meanwhile, global oil demand has surged to 103.4 million barrels per day (bpd), up by 1.4 million bpd year on year, JPMorgan analysts said on Friday.

“Initially sluggish demand for mobility and heating fuels picked up in the second week of February, suggesting the gap between actual and projected demand will soon narrow,” the bank said.

“Heating fuel use is expected to rise again. Additionally, soaring gas prices in Europe could prompt a shift from gas to oil, boosting demand.”

Oil refineries shift to renewables and petrochemicals amid evolving energy demand

In response to growing global demand for environmentally friendly fuels, oil refineries have been progressively integrating renewable feedstocks into their traditional crude oil refining processes, Reuters reported on Friday.

This strategic shift involves the incorporation of diverse renewable resources, with used cooking oil emerging as a prominent example, into the existing crude refining streams.

This innovative approach not only advances the production of cleaner fuels but also aligns with the broader sustainability goals of the energy sector.

Demand for catalysts and additives to remove impurities from bio-feedstock has increased as a result of this, Maurits van Tol, chief executive of catalyst technologies provider Johnson Matthey, told Reuters on the sidelines of the India Energy Week conference on Friday.

In recent years, there has been a notable shift in the sourcing of materials for various industrial processes, particularly within the energy sector.

This transition is primarily driven by a growing emphasis on sustainability and the search for renewable alternatives to traditional fossil fuels.

Alternative feedstocks

A key aspect of this shift is the increasing utilisation of alternative feedstocks, which are materials derived from sources other than conventional fossil fuels.

These alternative feedstocks can include a wide range of options, such as biomass, organic waste, and agricultural byproducts.

Biofuels are renewable fuels that are derived from organic matter, and they can be used as a substitute for gasoline, diesel, and other fossil fuels.

The use of alternative feedstocks in the production of biofuels can help to reduce greenhouse gas emissions and decrease dependence on fossil fuels.

van Tol said: “What we see is alternative feedstocks, the blending in of some components with biomass background at refineries in the last couple of years.

The pervasive use of cheaper heavy crude, which damages units due to its higher sulphur content, is also driving demand for catalysts and additives,” van Tol added.

Another important application of alternative feedstocks is in the refining industry.

Refineries are industrial facilities that process crude oil into various petroleum products, such as gasoline, diesel, and jet fuel.

In recent years, some refineries have begun to blend alternative feedstocks, such as biomass, with crude oil during the refining process.

This blending can help to reduce the carbon intensity of the resulting petroleum products and improve their environmental sustainability.

The use of alternative feedstocks in the energy sector is still in its early stages, but it has the potential to play a significant role in the transition to a more sustainable energy system.

Petrochemicals

The growth of electric vehicles has lowered the demand for transportation fuels

Because of this, refineries are shifting their focus to producing more petrochemicals.

New age refineries will be configured to produce more lighter products, such as gasoline and naphtha, state-run Engineers India chairperson Vartika Shukla was quoted in the report.

Additionally, Bharat Petroleum intends to significantly increase its petrochemical production, Sanjay Khanna, director of refineries at the Indian company.

The goal is to have petrochemicals account for over 40% of their portfolio, up from the current 2-3%, according to Khanna.

This expansion will be achieved through BPCL’s new refinery in Southern India, he added.

The state of Andhra Pradesh will be the site of a new refinery with a minimum capacity of 180,000 barrels per day, according to Bharat Petroleum’s plans.

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