Crude Oil Prices Remain Volatile at High Levels; Northwest High-Olefin C5 Prices Recover

Lead-in: Continued instability in the Middle East, combined with hurricane-induced shutdowns of some offshore oil wells in the United States, has kept crude oil prices at high levels. Additionally, post-holiday restocking demand from the market has boosted prices for Northwest high-olefin C5 fractions. As of October 10, the average price of Northwest high-olefin C5 was RMB 8,894/ton, an increase of RMB 401/ton compared to pre-holiday levels, representing a rise of 4.7%.

I. Price Comparison of Northwest High-Olefin C5

Before the National Day holiday, refineries in the Northwest concentrated on clearing inventory accumulated during the holiday period, leading to a noticeable drop in prices. Traders and downstream factories purchased stock opportunistically when prices were low, resulting in weak market transaction sentiment. After the holiday, supported by high crude oil prices and post-holiday restocking demand from downstream markets, the market trend for Northwest high-olefin C5 rose significantly. Some refineries continued to fulfill contracts signed before the holiday and temporarily suspended new shipments. Traders and downstream factories actively entered the market, improving transaction sentiment. As of October 10, the average price of Northwest high-olefin C5 reached RMB 8,894/ton, up by RMB 401/ton, or 4.7%.

II. Rising International Crude Oil Prices Support Costs for High-Olefin C5

Table 1: Comparison of International Crude Oil and Related Product Prices (USD/barrel)

Data Source: Chempricehub Information

Both the US and Iran indicated that negotiations and dialogues are ongoing, easing market concerns. However, the impact of hurricanes on US crude oil production continues to suppress output, driving international oil prices higher. NYMEX crude oil futures for November settled at USD 91.85/barrel, up USD 2.47/barrel from pre-holiday levels; ICE Brent futures for December settled at USD 104.72/barrel, up USD 2.13/barrel from pre-holiday levels.

III. Weak Shandong Gasoline Prices Limit Gains for High-Olefin C5

Table 3: Comparison of Shandong Gasoline and Related Product Prices (RMB/ton)

Data Source: Chempricehub Information

In the gasoline market, following the long holiday, retail gas station sales stabilized as travel frequency decreased. Station operators focused mainly on essential restocking, maintaining moderate inventory levels for purchasing and sales. As of October 10, the price of 92# gasoline in Shandong was RMB 9,921/ton, down by RMB 172/ton compared to pre-holiday levels.

IV. Post-Holiday Outlook

The market trend for Northwest high-olefin C5 in October is expected to be strong initially and then weaken. Regarding crude oil, there remains potential for US-Iran negotiations. Furthermore, political pressure arising from high oil prices creates incentives for the US to lower them. Coupled with weak global crude oil demand and a strengthening US dollar, which both exert downward pressure on prices, international crude oil prices are expected to have room for decline in October. Regarding gasoline: In October, more refineries in Shandong may face tight supply of crude oil resources, leading to a predicted decrease in operating rates for local Shandong refineries. However, with the end of the post-National Day peak consumption season, demand support for gasoline will weaken. Therefore, gasoline prices from Shandong local refineries are expected to face correction pressures in October. In early October, a certain refinery in the Northwest will enter maintenance, reducing spot supply and demand. Overall, the market trend for Northwest high-olefin C5 in October is projected to start strong and then soften, with limited declines.