Weekly Bitumen Report: The Return of Doubts to the Market by the Recent Drop of Crude Oil Prices

In the 163^rd of the Russia- Ukraine war, although it seems that Russia is partially overcoming Ukraine, the military aids of the West to Ukraine has reduced the speed of Russia’s progression. However, the various contradictory events and incidents in the market of energy and economy have raised the doubts and the market players are struggling with hesitations.

On August 1, the oil markets started with the fall of prices by releasing the news by Singapore in that it was mentioned about the fall of production in China and Japan which could be a sign of world suspicions about the predictions of global economic growth.

The uncertainties in the market continued in a situation that the oil experts had already predicted a range of 93-107 US dollars for crude oil.

On August 3, the outcome of OPEC+ meeting was to increase oil production to 100 thousand barrels more per day. This increase was not significant considering the previous increases in the other meetings of OPEC+. However, it seems that Saudi Arabia efforts resulted positively after Biden’s travel to the Middle East and his request to increase the production and decrease of the prices.

At the same time, Reuters published a piece of news about the reduction of USA Strategic Petroleum Reserve to its lowest level during the last 37 years.

In the meantime, the secretary-general of the United Nations requested the countries to increase the tax amount received from oil companies as the profit of these companies that were obtained during Russia- Ukraine war was unethical.

Besides, Russia turned off the Nord Stream turbine and decreased the export of its natural gas to the Europe that generally should lead to the surge of oil price.

But the main downward signal of crude oil originates from the data of U.S Energy Information Administration showing unexpected increase of crude oil reserves of the USA and decrease of petrol demand in the last week of July.

All of the above-mentioned data are being published while the experts believe that the worries about the economy recessions have more effects on the fall of oil price and maybe the latest decision of OPEC+ to increase the oil production to 100 thousand barrels more cannot be the main reason of fall of crude oil prices.

In the meanwhile, till August 4, Iran is expecting an increase of 4.4% of the prices based on the bitumen pricing formula but it is not clear how the fall of crude oil price will affect the finished cost of bitumen.

On the other hand, it is heard that Indian refineries will decrease bitumen prices on 15 August too whose main reason can be the fall of crude oil. Also, Singapore bulk bitumen was around 554 US dollars and Korea bulk bitumen was in the range of 503-507 US dollars.

It seems that the market players should wait for oil prices till 8 August to see if there will be a downward or upward trend and after that more appropriate decisions can be made about the market of bitumen.

This article was prepared by Razieh Gilani, the export manager of Infinity Galaxy (www.infinitygalaxy.org).