Crude oil is a naturally occurring, unrefined petroleum product that can be refined to create usable and essential products like gasoline, diesel, kerosene, liquefied natural gases, etc. Industrialization has highlighted the importance of crude oil with its widespread usage in energy and power industries. Fuel has contributed over a third of the world's energy consumption, and the finite resource is required in manufacturing almost all consumer goods available in the market. Chemical companies in Los Angeles use crude oil to manufacture petrochemical products and provide bulk supply with higher demand. Here, the crude oil price is a significant factor and determines the prices of petroleum products that it produces. Hence, this article will delve into the impact of rising petrochemical prices on crude oil in the US market.
Rising Petrochemical Prices On Crude Oil
Studies state that in 2019, the US itself consumed 7.5 billion barrels of crude oil, where 3.4 billion was used in motor gasoline. 2020 shows the most hurtful fuel demand with the coronavirus pandemic and the highest drop in the market with worldwide import and export restrictions.
However, oil prices have recovered from their lowest records in April with the rising demand from the early months of the pandemic. Crude oil stocks at the US storage hub have plunged by 2.3 million barrels. The oil market has gained 34 cents raise for Brent crude and 24 cents increase for WTI crude.
US Energy Information Administration (EIA) states the total US petroleum demand will grow by 1.4 million in 2021 and 1 million in 2022. The petroleum consumption is expected to be increased and widely distributed with the continued recovery from the pandemic where the travel will retrieve, and business will resume.
Impact Of Rising Petrochemical Prices
EIA expects a rise in Brent crude oil in the first quarter of 2021. EIA further states that the recent surge in Covid-19 will continue to limit the global oil demand. However, they expect an upward price pressure after the first quarter of 2021.The rise of crude oil can drive up petrochemical costs, increasing chemical intermediates and plastics prices. It is generally said that the increased inflation can reduce economic growth as it directly affects the price of end products based on crude oil.
Furthermore, this rise has also affected regular gasoline and diesel prices. The average retail price of gasoline has increased from 5 cents to $2.46 per gallon, whereas diesel fuel price increased more than 6 cents to $2.80 per gallon.
Additionally, petrochemical prices have impacted the residential heating fuel prices, where oil prices have raised almost 7 cents per gallon, making an average of $2.67. Wholesale heating oil prices have grown to 12 cents making the prices nearly $1.48 per gallon.
Agricultural chemical companies and chemical manufacturers in California shift with the global chemical trade flows and the price fluctuations can comply with the increase or decrease in demand of the products from its consumers.
Since the price of crude oil is directly proportional to petroleum products and the consumer's end product price, it is vital to find a chemical supplier that can be proven beneficial in terms of pricing for bulk demands required by companies.California Chemical provides the most appropriate quotes for all your chemical needs. Our high-quality products guarantee cost efficiency for businesses, along with an increased profit margin and wider market share.