Benzene Prices Dynamics Intend to Incline as the US Crude Stock Falls

Texas- The Benzene prices in the US market remained at a higher edge throughout the end of the seventh month of 2023 on account of inclined demand from downstream (styrene, cumene, ethylbenzene, and acetone). The major facet governing the overall market dynamics of Benzene is the inclined crude oil prices amidst the limited inventories in the US market. According to the data published by the US Strategic Petroleum Reserve (SPR), the limited supply of the Benzene the overall production cost of Benzene inclined in the domestic market. Towards the end of the fourth week of July, Benzene prices were assessed at USD 1074 per MT, FOB Louisiana.

In some regions, oil inventories are declining as demand exceeds supply due to significant production cuts by Saudi Arabia. This imbalance is expected to boost prices in the upcoming months of 2023 in the international market. According to the major market players of Benzene, the influence of oil inventories, encompassing both crude and fuel products, on oil prices has surpassed that of the U.S. dollar. This shift has been accelerated by Western sanctions on Russia, leading to increased oil trading in alternative currencies, proportionally impacting the overall production cost of Benzene in the US market.

The Energy Information Administration (EIA) calculates the Crude Oil Inventories, a metric that gauges the weekly fluctuation in the volume of commercial crude oil held by U.S. enterprises. The inventory levels exert influence on the pricing of petroleum products, consequently affecting inflation. The significance of this lies in the analysts' anticipation of a gentle economic slowdown without plunging into a recession, despite the challenges posed by high inflation and the subsequent increase in interest rates aimed at addressing it.

Downstream, styrene showcased inclined demand for Benzene amidst the better demand from the automotive industries. The volume of new U.S. light vehicle sales had increased due to the alleviation of supply-chain challenges. Automakers are now able to boost production to meet the pent-up demand as disruptions caused by the pandemic, particularly the shortage of semiconductor chips and other essential raw materials, previously hindered their ability to meet the heightened need for personal transportation. Many economic analysts are growing more positive about the economy due to encouraging improvements in inflation data and robust key economic indicators such as GDP growth, consumer spending, and job creation, all of which have surpassed expectations.

As per ChemAnalyst, Benzene prices are further anticipated to incline in the domestic market as the operational rate along with the inclined production cost, may showcase its significant impact n the overall market dynamics of Benzene. The Fed might find it necessary to implement another interest rate hike in September to tackle inflation further, but such a move could potentially result in a more significant slowdown of the economy than initially anticipated. Additionally, it's important to consider that the impact of higher interest rates on the economy may take some time to manifest due to substantial lags in the process fully.