Expectations for Price Reductions Failed

In recent weeks, there have been developments in the oil and lubricant market that did not last long. At the beginning of the week, due to the fall in oil prices, the recycled oil price tended to fall. Even though, the recycled base oil SN 150 FOB price fell to around $680. Since Monday, Pfizer vaccine reports about the approved immunity against the Lambda and Delta variants have pushed oil prices up from $64 to about $70. The increase could also be attributed to the Ida Hurricane in the Gulf of Mexico. The storm caused power outages, damage and delays in the operation of refineries and storage terminals. It also increased oil prices by about 7%. This incident, albeit serious, did not stop trades as much as expected.

The latest market events have caused the price of recycled oil to keep running upward. Considering the end of Manson in East Asia and India, and the growing vaccination rates in India by up to 30% of the population, the market expects the demand from India to rise sharply in the coming weeks as prices increase.

Changes in the value of the dollar against the rial and some other international currencies caused several markets to change. Shipping line issues, transportation problems and congestion in Jebal Ali remain strong. Demand for Indian bitumen was low while demand for petroleum products increased with looser lockdowns. Requests for recycled base oil is increasing due to the end of the holiday season. Meanwhile, it seems that the demand and price of recycled oil are both increasing.

While the market expected the price to decline in early September, insignificant fluctuations happened to the price. Reports indicate that the recovery from the damage caused by Hurricane Ida and the process of returning to refinery production is very slow, which seems to maintain the rising trend in oil prices. However, it seems cutting the Asian contracts by Saudi Arabia will stop this rapid trend for a while. Sellers do not seem to be willing to decrease prices. Buyers do not look forward to price reduction either. Coming local celebrations and occasions in India has also increased the use of lubricants in this country.

The paraffin and lubricant market have been still stable. Despite the high demand, producers have not taken any action to increase production. This delay has brought a dull market with low trading rates. We recommend that market participants avoid making big deals in the current situation. Remember to finalize the delivery time and product inventory with the supplier before making any deal.

This article was prepared by Tina Taghavi, account manager of Infinity Galaxy. (www.InfinityGalaxy.org)