US Benzene Prices Drop With Plunging WTI Crude Oil Costs
- 27-Nov-2023 3:54 PM
- Journalist: Motoki Sasaki
US Benzene prices continued to tumble towards the end of November as the operational rate and the production cost of Benzene decreased, owing to the continuous drop in WTI crude oil prices. The Benzene price quotations were observed at USD 1030 per metric ton, FOB Louisiana, in the US market on the week ending November 24th, 2023.
The decrease in WTI crude oil prices coincided with the initiation of a ceasefire in the Gaza Strip. OPEC+ has delayed important meetings, leading to assumptions about potential reductions in oil production for the year 2024. Oil price trends are influenced by various global factors, including increased crude stockpiles in the US, uncertainty surrounding Asian demand, and the growth of non-OPEC production.
The decline in oil prices can be linked to the Federal Reserve's hawkish stance, which is evident in the minutes released after the November meeting, and contrary to widespread anticipation, no potential rate cuts were announced. The Fed expressed dissatisfaction with the sluggish decline in inflation and suggested the possibility of additional rate hikes. This week's focus will be on the oil sector, particularly with the OPEC and Russia meeting to decide on potential oil supply cuts. This occurs amidst opposition from African members of OPEC, impacting the production cost of Benzene in the US market.
In November, US Benzene business activity remained stable, with predictions of an economic slowdown in the fourth quarter. In early November, all members of the US Federal Reserve unanimously agreed that maintaining high interest rates for an extended period would be appropriate to address inflation concerns, as revealed in the minutes of their latest meeting. This move was part of the Fed's strategy to bring inflation down to its long-term target of 2 percent without jeopardizing the robust state of the economy.
Benzene demand outlook in the domestic market is moving slowly and steadily. Benzene serves numerous industrial and commercial purposes, primarily as a solvent. Products incorporating Benzene can function as solvents at different stages of production. Furthermore, Benzene is instrumental in manufacturing various chemical and plastic products, such as resins and synthetic materials like nylon. Products containing Benzene, including detergents, dyes, and pesticides, are produced and employed for metal degreasing. The demand outlook from styrene, resins, and as a polymer solvent is still under pressure amidst the weak demand and federation rate. As per ChemAnalyst, Benzene prices are expected to follow the declining phase in the coming months amidst the slow demand and reducing WTI crude oil prices.