US Raffinate Prices Show Declining Trends Amid Economic Uncertainty And Low Crude Oil Prices

Louisiana (USA): In the US market, Raffinate prices have decreased due to weakened demand from downstream industries, compounded by the lower prices of Raffinate Feedstock WTI Crude oil, resulting in an overall reduction in production costs. The decline in Raffinate Feedstock crude oil prices is attributable to market concerns regarding global demand, which have counteracted price support stemming from the Israel-Hamas conflict.

On Tuesday, oil prices settled at a lower level, with apprehensions about global demand outweighing the price support from the Israel-Hamas conflict. Brent futures experienced a decline, reaching the highest six-month spread since October, indicative of a tightening market. US oil refiners are presently operating at diminished levels due to seasonal maintenance and unplanned outages, although warmer winter weather may prompt refiners to increase their rates. Last week witnessed an increase in US crude inventories, while refinery utilization rates were expected to rise by 1.1 percentage points from the previous week's 80.6% of total capacity.

Additionally, the substantial levels of Raffinate Feedstock crude oil inventories in the market have further exacerbated downward pressure on prices. There is an anticipation that Raffinate prices will rise against the backdrop of increasing Raffinate Feedstock Crude prices, and market inventories are projected to return to normal levels. Furthermore, there is an expectation of increased demand from the international market leading to heightened inquiries from overseas markets.

As the plants of Raffinate were operating at stable rates with adequate demand from the downstream industry, it is important to note that the prices of feedstock Crude oil prices have declined, denoting weak demand from the downstream Raffinate. Furthermore, up to this week, there have been no documented interruptions in the supply chain. It is anticipated that import prices from the US market will increase in the upcoming weeks, leading to a rise in prices of domestic inventories. There hasn't been a significant change in demand observed in Raffinate downstream sectors such as MTBE and MEK, leading to lower performance in these industries.

However, there is an expectation that the industry will maintain its robust performance through the initial quarter of 2024. Additionally, Raffinate downstream MTBE usage in the gasoline industry is increasing due to rising downstream consumer demand. In the January Short-Term Energy Outlook (STEO), the EIA projected that the average U.S. regular gasoline price would be $3.36 per gallon in 2024 and $3.24 per gallon in 2025.

According to the EIA's latest fuel update, which reported the retail price of regular gasoline at $3.13 per gallon in December 2023, 56 percent of that total was attributed to crude oil costs, 19 percent to distribution and marketing costs, 16 percent to taxes, and 8 percent to refining costs.