US February benzene contracts settle higher for first time in five months

Author: Zachary Moore


HOUSTON (ICIS)--US February benzene contracts settled 10 cents/gal ($30/tonne) higher at $1.93/gal free on board (FOB) US Gulf, marking the first increase in five months.

Benzene contracts hit a 33-month low in January, tracking steep losses in spot prices driven by long benzene supplies and the sharp drop in crude oil prices during the fourth quarter.

Benzene supply remains sufficient, although participants feel the market may be able to work through excess inventories in the coming weeks. The heavy refinery turnaround season in the US should help pare down supply levels, although some downstream turnarounds may limit consumption.

Spot benzene prices have regained some lost ground in recent weeks after plummeting to a nine-year low early in January.  The recovery in spot prices has been driven by the recovery in the crude oil market.

US benzene contracts typically settle on the last working day of the prior month and are heavily influenced by late month movements in spot prices.

After bottoming out in late December at just under $45/bbl, NYMEX WTI crude futures moved back above the $50/bbl threshold in January, with prices fluctuating in the mid-$50s/bbl at the end of the month. Oil prices found some support from hopeful signs that the US and China might reach an agreement to resolve trade tensions between the two countries, which would be supportive of healthier global economic growth.

Major US benzene producers include ExxonMobil, Flint Hills Resources, LyondellBasell, Marathon Petroleum, Shell and Phillips 66.