Weekly Bitumen Report: Ambiguous Conditions in the Market despite the Demand to Buy
Despite Saudi Arabia’s voluntary announcement of reducing oil production at the latest OPEC+ meeting, oil prices failed to rise again and Brent crude remained in the range of 72 to 76 dollars. Wednesday, new reports were released indicating that the United States intends to increase crude oil production. The US Energy Information Administration (EIA) predicts that the OPEC+ production cut will slightly reduce global crude oil reserve, thereby increasing global crude oil prices in late 2023 and early 2024.
While the main focus of the media and politicians in the United States is on inflation and rising prices, the report of the increased job opportunities during May has surprised economists in the country. According to official reports, 339 thousand new jobs were added to the US market in the past month, far exceeding expectations and predictions. However, even this number of job creation could not act as a driving force to increase oil prices.
Some analysts believe that the weak economic statistics published from China are casting a shadow on the world economy and the risk of a severe economic recession is much greater than previously thought.
In the meantime, the visit of the President of Venezuela to Saudi Arabia after closer ties between Saudi Arabia-China and the establishment of diplomatic relations with Iran suggests a balance of power shift in the Middle East. This development has also caused concern for the United States and may cause changes in political and trade equations in the region in the near future.
During the first three days of this week, the price of Singapore HSFO 180 CST increased by about 21 dollars, while Singapore bitumen was traded at around 469 dollars on Wednesday, down 5 dollars. South Korean bitumen was also traded at 395 dollars.
Conditions in Bahrain were similar to those of the past two months, and Bahrain bitumen was traded at 370 dollars. However, the situation suddenly changed in India, and bulk bitumen at two Indian refineries dropped by about 22 dollars on June 7th, which was not unexpected given the onset of monsoon season in most parts of India, but the sudden drop in these two refineries was surprising.
In Iran, the base price of vacuum bottoms decreased slightly on June 5th so that the price of Iran bitumen could reach its minimum level at the beginning of 2023. The competition rate between refineries also reached below 60%, putting more pressure on Iran bitumen exports.
In addition, with the ongoing negotiations between Iran and the United States and the creation of more openings in the negotiations, the parity of the US dollar against the Iran rial has approached its lowest level in the past three months. This has caused exporters to be concerned about losing their market share due to falling oil prices, resulting in almost uncertainty prevailing in the market.
Due to these conditions, it is possible that the announcement of some very low prices out of the range may cause buyers to lose their investments, so it is recommended to make any commercial decisions with more caution in these conditions.
This article was prepared by Razieh Gilani, the export manager of Infinity Galaxy (https://infinitygalaxy.org/)
