US spot MX-WTI spread widens for another week

HOUSTON (ICIS)–The spread between the US spot mixed xylenes (MX) price and upstream crude oil widened last week for the second consecutive week, ICIS analysis showed on Monday.

For the week ended 21 October, MX was valued at $1.14/gal above West Texas Intermediate (WTI) crude oil futures, up from $1.10/gal in the prior week. The spread between MX and WTI prices had last moved above the $1.10/gal threshold in mid-September.

NYMEX crude oil futures firmed up last week following some fluctuations on the week. A proposed freeze in oil production supported prices while a higher US rig count provided some counterbalancing pressure.

MX prices rose again last week to hit a fresh year-to-date high for 2016. Prices have continued to climb on the basis of ongoing supply limitations along with firm energy costs.

MX can be used as a gasoline component in fuels to boost octane, as a chemical feedstock or as a solvent. Its use as a solvent, a small part of the MX market, has little effect on MX prices, which are usually driven by octane and chemical demand.

As an octane component in fuels, MX is in its strongest demand season during the summer when fuels must be less volatile. During the winter, fuel blenders can use less expensive octane boosters such as butane. The summer fuels season runs through mid-September.

As a chemical feedstock, MX is most often used to produce paraxylene (PX) for the polyethylene terephthalate (PET) chain, which has its strongest demand season during northern hemisphere summers.