US Raffinate Prices Likely to Remain Bullish in Q4 2023 Amidst Rising Crude Oil Costs

The Raffinate prices exhibited an upward trajectory in the US market amid firm demand from downstream MTBE and MEK industries, creating a sustained demand dynamic from downstream sectors. The primary factor influencing the heightened Raffinate prices in the US is the escalating costs of Raffinate Feedstock crude oil. Recent data from the Energy Information Administration (EIA) reveals a 1.4-million-barrel increase in US crude inventories for the latest week, reaching a total of 421.1 million barrels. Despite this, there is an anticipation that crude oil prices are expected to increase in the upcoming weeks. Furthermore, the prices of crude oil in Europe did not increase significantly due to a weak economic outlook, but due to the uncertainty in the Middle East oil market due to the war, prices are expected to rise.

In the current US market landscape, Raffinate prices have experienced an upward trajectory in September, influenced by the heightened rates of Feedstock crude oil. Simultaneously, downstream sectors of Raffinate, such as MTBE and MEK, continue to display robust demand. This surge in demand extends beyond domestic markets, with international markets like Mexico and Canada contributing to sustained and consistent demand. However, it's worth noting that the Purchasing Managers' Index (PMI) for the US market has declined from 47.90 in August to 49.80 in September 2023, indicating a contraction in the manufacturing sector. On the production front, plants have been operating at reduced capacities due to the elevated cost of Raffinate Feedstock crude oil amid subdued demand from downstream industries. Additionally, the prices of Natural Gas have increased this month, further contributing to the increment in pricing from the production perspective.

According to the ChemAnalyst database, the ongoing conflict in the Middle East is expected to exert upward pressure on Raffinate feedstock crude oil prices. However, current prices have been constrained due to elevated crude oil inventories and a less optimistic economic outlook for European projects. It is important to note that this situation is poised for a shift soon, with projected price escalations that will subsequently permeate downstream through the supply chain. This uptick contributes to an overall landscape characterized by an abundant Raffinate feedstock crude oil supply. Additionally, robust demand from Raffinate downstream industries, including MTBE and MEK, is anticipated. This sustained demand from the Raffinate downstream sector emphasizes the potential transmission of heightened prices throughout the supply chain. From the production point of view, the prices of Natural Gas are expected to maintain stability.