US Benzene Prices Drop as Crude Oil Stockpile Falls Amidst Weak Demand

The Benzene prices in the US market continued to plunge and remain on the softer side of the price range amidst the slow demand from domestic and international downstream markets. The Energy Information Administration (EIA) reported a decline in US crude oil reserves, marking the first decrease in production since the end of Q2. Simultaneously, gasoline and distillate inventories increased due to heightened refinery activity. The major facets impacting the overall prices of Benzene are generally governed by the Benzene and feedstock (naphtha and crude oil) supply chain and the demand strength from downstream, such as aromatics and monomer production like styrene in the US market. The production cost of Benzene consecutively declined by the reduced WTI crude oil prices accompanied by the bargained demand volume. Benzene price quotations in the US market were witnessed at USD 1030 per MT, FOB Louisiana, on the week ending December 1st.

On Wednesday, Russia and Saudi Arabia convened to discuss increased collaboration on regulating oil prices. Both leaders, being members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+), aimed to bolster market confidence in the effectiveness of implemented output cuts. Despite OPEC+ announcing voluntary production cuts last week, resulting in a 2% decrease in oil prices, concerns arose regarding the complete implementation of these reductions. The ongoing competition between OPEC+ and the surging US oil production has significantly influenced Benzene market prices. The recent OPEC+ meeting, where a voluntary cut of 2.2 million barrels per day was declared, failed to drive an increase in oil prices, with the spotlight remaining on US production Benzene levels.

In November, US Benzene manufacturing continued to show limited growth, with a decline in factory employment attributed to a slowdown in hiring and an increase in layoffs. This adds to the mounting evidence that the economy is losing steam after a robust growth period in the last quarter of 2023.

The Institute for Supply Management (ISM) survey comes on the heels of recent data indicating modest growth in consumer spending and a decrease in inflation towards the end of Q4 of 2023. The overall economic activity is slowing down due to higher interest rates affecting Benzene demand. While many economists don't anticipate a recession in the coming year, they believe the Federal Reserve can achieve the desired economic anchoring.

Certain economists suggested that the concluded United Auto Workers strike, which finished in late October, still influenced the Purchasing Managers' Index (PMI). A swift recovery seems improbable, given that manufacturers in the ISM survey largely characterized their inventories as excessive. As per ChemAnalyst, the Benzene prices in the US market are expected to move again steadily and slowly in the upcoming weeks as the slow demand is expected to govern the overall price dynamics of Benzene in the US market.