Raffinate Prices Weaken Amid Falling Prices of Feedstock Crude oil in the US

Texas (USA): In the US market, Raffinate prices have declined due to reduced demand from downstream industries, coupled with the decrease in global Crude oil prices, resulting in an overall reduction in production expenses. The decline in oil prices followed a larger-than-anticipated increase in US crude stockpiles, raising concerns about sluggish demand. Additionally, after effect of prolonged elevated interest rates in the USA added to the downward pressure.

While US crude oil downstream Raffinate inventories increased, gasoline and distillate stocks fell last week as refiners operated at levels below seasonal norms due to planned and unplanned shutdowns, according to the Energy Information Administration (EIA). The drop in upstream crude oil prices for Raffinate is linked to market worries about global demand, countering price support from the Israel-Hamas conflict. Despite the conflict, Raffinate's upstream oil prices settled lower on Tuesday due to concerns about global demand. Brent futures saw a decline, reaching their highest six-month spread since October, indicating a tightening market.

US Raffinate's upstream oil refineries are currently operating at reduced levels due to seasonal maintenance and unplanned shutdowns, although warmer winter weather might prompt an decline in rates. Last week saw a rise in US Raffinate's upstream crude inventories, with refinery utilization rates expected to rise. Moreover, the significant levels of Raffinate's upstream crude oil inventories in the market have intensified downward pressure on prices. Anticipation exists for Raffinate prices to increase amid rising feedstock crude oil prices, with market inventories projected to normalize. Additionally, there is an expectation of heightening demand from the international market, which may result in increased inquiries from overseas markets.

The Raffinate plants have maintained stable operations amidst sufficient demand from downstream industries. It is noteworthy that the decline in feedstock crude oil prices indicates subdued demand from the downstream sectors. Moreover, there have been no reported supply chain disruptions this week. Forecasts suggest that import prices from the US market will likely rise in the coming weeks, consequently, drive up domestic prices.

There hasn't been a notable change in demand observed in downstream sectors like MTBE and MEK; however, there has been a decrease in the performance of downstream industries overall. Additionally, there is an anticipation that the industry will sustain a robust performance through the first quarter of 2024.

As per ChemAnalyst, anticipations are an increase in Raffinate prices, which would be driven by the upward trajectory of crude prices and escalating demand from downstream MTBE and MEK industries. Moreover, expectations entail a rise in production costs due to the expected surge in Natural Gas prices.