PIRA Energy Group’s weekly analysis of oil market fundamentals has revealed the following:
- The decline in Cushing stocks continued for a third straight month, while Gulf Coast stocks continued to rise, reducing the discount of WTI to Brent and LLS.
- Rising stock levels in the Rocky Mountains and West Texas caused differentials for crudes in those regions to weaken.
- The past week closed the first quarter 2014 with a stock decline. There were just four weeks of stock builds during this year’s first quarter. 2014 has so far matched the largest inventory decline since 2009.
- US propane inventories are relatively low.
- Stock building will be commencing as the heating season comes to an end, but with exports remaining high the comparison to a year ago will be favourable.
- PIRA anticipates that ethane usage will be affected by a high level of steam cracker downtime over the next couple of months.
- US ethanol prices increased sharply to an eight year high on Monday, and inventories dropped to a 15 week low during March as the lack of railcars to transport ethanol forced manufacturers to reduce output.
- Ethanol production increased to a fourteen week high at 922 000 bpd for the week ending 28th March, from 885 000 bpd during the previous week, as manufacturers sought to take advantage of near record prices.
- Ethanol inventories rose for the second consecutive week, by 222 000 bbls to 15.9 million bbls.
- Canadian differentials improved modestly from very weak levels.
- Saudi Arabia’s formula prices for May prices for May were recently released. European differentials were lowered, relative to April, while US and Asian differentials were tightened. European reductions were greatest on the lightest of grades, and slightly less for the heavier grades such as Arab Medium and Arab Heavy. After two months of no change, US differentials were tightened quite significantly, with the biggest adjustment on Arab Heavy.
Adapted from press release by Emma McAleavey.
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/08042014/pira_oil_market_recap347/