PIRA Energy Group’s analysis of weekly oil market fundamentals has revealed the following:
- Canadian crude differentials strengthened relative to West Texas Intermediate (WTI) in April.
- All Midcontinent crude prices strengthened relative to Brent and Louisiana Light Sweet (LLS).
- Low shoulder season demand is likely to continue to pressure propane prices.
- Excess ethane due to surging ethane production will leave ethane prices tied to natural gas prices for some time to come.
- US ethanol prices continue to decrease as inventories build for the second straight week, reaching the highest level since July 2013.
- Cash margins declined again, but are still substantially higher than at this time last year.
- Stocks continued to fall in Cushing, as recently installed pipeline capacity continues to move to PADD II crude surplus into PADD III.
- A total commercial stock build for the week of 2 May narrowed the year on year stock deficit by building at about twice the rate as the same week last year. Stock deficit of the four major refined products widened, while the deficit of propane and all other products was almost half. Propane led stock increases with the largest weekly build in 10 years.
- Total commercial stocks built over the past two weeks, with finished products and crude rising.
- Runs declined in both weeks.
- There were two consecutive stock builds for both gasoline and gasoil. Gasoil demand declined to the impact of the ‘Golden Week’ holiday.
- US formula prices increased by US$ 0.80/bbl versus the sour benchmark and are at their highest levels seen yet. The price for Saudi crude for US destinations has risen US$ 3/bbl since December 2013 compared to local competing USG grades. According to PIRA Energy, this will ultimately result in lower liftings by US refiners and consequent repositioning of Saudi exports more towards growing Asian markets.
Adapted from a press release by Emma McAleavey.
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/13052014/pira_analysis_515/