• 2 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 2 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 2 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 2 days Schlumberger Warns Of Moderating Investment In North America
  • 2 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 2 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 2 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 2 days New Video Game Targets Oil Infrastructure
  • 2 days Shell Restarts Bonny Light Exports
  • 2 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 2 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 3 days British Utility Companies Brace For Major Reforms
  • 3 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 3 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 3 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 3 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 3 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 3 days Rosneft Signs $400M Deal With Kurdistan
  • 3 days Kinder Morgan Warns About Trans Mountain Delays
  • 3 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 4 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 4 days Russia, Saudis Team Up To Boost Fracking Tech
  • 4 days Conflicting News Spurs Doubt On Aramco IPO
  • 4 days Exxon Starts Production At New Refinery In Texas
  • 4 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 5 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 5 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 5 days China To Take 5% Of Rosneft’s Output In New Deal
  • 5 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 5 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 5 days VW Fails To Secure Critical Commodity For EVs
  • 5 days Enbridge Pipeline Expansion Finally Approved
  • 5 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 5 days OPEC Oil Deal Compliance Falls To 86%
  • 6 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 6 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 6 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 6 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 6 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 6 days Aramco Says No Plans To Shelve IPO
Alt Text

Is South America Set For A Gold Rush?

A Chinese gold miner is…

Alt Text

Will Ecuador’s Mining Sector Return To Its Golden Days?

Despite the recent political problems…

Alt Text

Copper Prices Ignited By Chinese Demand Growth

Copper prices saw some gains…

Profits On This Obscure Commodity Are Up 570%

Profits On This Obscure Commodity Are Up 570%

I've talked a lot about U.S. shale drilling--and its effect on specialty chemicals markets.

We've seen a major impact lately in sectors like natural gas liquids. Where surging U.S. production of propane and butane has begun to alter the global market for these products.

But news last week suggests that shale drilling is actually creating a shortage of one group of commodities. Leading to some of the most powerful price appreciation we've seen anywhere in natural resources recently.

Platts reports that U.S. contract prices for the chemical benzene hit a record in July, coming in at $5.28 per gallon ($1,580.30/mt). Benzene is an aromatic hydrocarbon, used in making high-value petrochemical products that feed into production of rubber and plastics.

The problem is, America isn't making nearly as much benzene as it used to. Thanks to the shale revolution.

A good portion of U.S. benzene production used to come as by-product from the making of other petrochemicals like ethylene. Processing plants called "reformers" would take in heavy, oil-based hydrocarbons--and spit out benzene and other substances.

But the explosion in shale gas production has given U.S. petrochemical firms a completely different kind of feedstock supply. Namely, lighter hydrocarbons like ethane--which is produced in abundance from wet gas plays like the Eagle Ford and the Marcellus.

Manufacturers have taken up this cheap supply as their go-to source. But there's one problem: processing of ethane doesn't yield significant volumes of by-product benzene. Meaning that U.S. production of the latter commodity has plummeted by as much as 45%. Below is a chart from Platts showing the notable drop in output.

Benzene supplies from pethcems

That shortage is starting to give a big lift to profits for the fewer firms that still produce benzene. With margins on benzene sales having jumped to $47.76 per tonne last week--up from from just $7.14 at the end of June. A stunning 570% gain in a matter of days.

The red-line production forecast in the chart shows that the benzene shortage is likely here to stay. Perhaps signalling a powerful driver of profits for select companies in this esoteric business.

Here's to reforming the market,

By Dave Forest




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News