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PIRA Energy oil market recap: Week ending 4 May 2014

Hydrocarbon Engineering,

PIRA Energy Group’s weekly analysis of oil market fundamentals has highlighted the following:

  • Physical markets are recovering, especially in the Atlantic Basin, supported by relatively low stocks and higher crude run demand. Low inventories have strongly started the gasoline season, but with higher crude runs gasoline stocks will build back towards more typical levels. Diesel tightness will ease over the next few months, but stocks will stay generally low all year.


  • Atlantic Basin crude supply growth supports stringth in Urals differentials, hurting refining margins for medium sour grades.
  • Light product exports from Russia will increase and vacuum gas oil (VGO)/straight run resid exports will decline, both this year and next.
  • Refining margins in Europe will remain challenged for the duration fo 2014, with marginal fluid catalytic cracking (FCC)/visbreaking capacity modestly attractive through midyear but weaker in the fourth quarter.
  • Gasoline cracks will peak early as stocks build back quickly over the next few months.
  • Distillate inventories will remain low and prices will strengthen further as demand picks up from midyear.


  • The Department of Energy (DOE) released its final monthly February 2014 US oil supply/demand data this week. Demand was 18.99 million bpd, compared to the 18.77 million bpd that PIRA had assumed in its balances. Compared with the weekly preliminary data, total demand was revised higher by 538 000 bpd, with distillate demand revised higher by 601 000 bpd, and gasoline stocks 226 000 bpd higher. This is due to the fact that exports were much lower than the DOE was assuming. End of February total commercial stocks were 1.047 million bbls.
  • US ethanol prices declined sharply during April as the weather in the Midwest improved and the gridlock in the rail system eased. Prices stabilized in the last few days of the month as some companies needed to purchase ethanol to meet April supply commitments.
  • Ethanol inventories built to the highest level since July 2013 in the week ending 25 April. Stocks rose by 694 000 bbls to 17.2 million bbls.
  • Ethanol production fell to 898 000 bpd, from 910 000 bpd during the preceding week.

Adapted from a press release by Emma McAleavey.

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