For the week ending 22nd December 2013, PIRA Energy Group expected Brent crude prices to stay strong and noted a decline in US stocks accelerating.
Brent crude prices
- Brent prices are expected to stay strong in the first quarter of 2014 due to tight global demand/supply balances and low inventories.
- Prices will trend lower later in the first quarter as refinery maintenance cuts crude demand and crude supply continues its unrelenting growth in the US.
- After declines in 2011 and 2012, European gasoline and gasoil/diesel demand appears to be showing some signs of bottoming out.
- European GDP growth is expected to accelerate in 2014 and 2015.
- Increased economic activity will be a plus for non-highway diesel demand. On highway use of diesel is expected to expand.
- Crude stocks declined due to import increases.
- Japanese gasoline and gasoil demands both eased and both stock levels built slightly.
- Japanese refinery margins eased slightly with lower middle distillate cracks more than offsetting gains in gasoline, naphtha and fuel oil cracks.
- Refinery margins are running just under statistical means.
Latin America, Asia and the USA
- Crude exports from Latin America to Asia are on the increase.
- Latin America crude exports the US are trending lower.
- Some Latin American countries are shifting exports to Asia more aggressively than others.
- Product demand reached 21 million bpd, a new year high.
- Stock decline increased to 12.6 million bbls.
- Total commercial stocks are over 23 million bbls lower than the same time last year.
- Before 2012, Venezuela imported almost no gasoline or diesel from the US.
- Between the beginning of 2012 and September 2013, imports of both averaged 45 million bpd.
- Outages in Venezuelan refineries are a cause of this along with diesel demand for power generation.
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