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Oil market recap: week ending 15 June 2014

Hydrocarbon Engineering,

PIRA Energy Group has said that Brent crude prices will average higher as global oil markets tighten. Also on the week, US products continue to build and crude draws again. When it comes to Japan, turnarounds continue and crude stocks built.


  • Brent crude prices will average higher in the US$ 110 – 115 /bbl range for the third quarter of 2014.
  • Rising product exports from Russia, US and Saudi Arabia will be absorbed by demand increases in Latin America, Africa and elsewhere in the Atlantic Basis, as well as by lower runs in Europe year on year.
  • European LPG prices proved to be far more susceptible to geopolitical supply risk than their American counterparts.
  • Both European propane and butane surged with risking crude by 3% to US$ 750/t and US$ 747/t respectively.
  • A lack of incremental European demand and tight competition with naphtha in Asia will continue to act as headwinds for international LPG prices.


  • Iraq is now in a state of sectarian civil war.
  • PIRA Energy believe that the most likely situation is that Iraq will become mired in a Syria like stalemate, with the population divided along ethno sectarian lines.
  • Northern Iraqi exports are unlikely to return, but the 2.6 million bpd of current southern exports could remain relatively well protected in Shia dominated territory.
  • Forecast Iraqi production growth has been called into question, providing more support to prices as the pressure on Saudi Arabia to cut production is likely to diminish.


  • Crude runs dropped back, and while crude imports also dropped, crude stocks built over 4 million bbls for a second week.
  • There have been two key delays in planned turnarounds, which will keep runs low for at least another two weeks.
  • Product demands showed modest changes.
  • Refining margins continued to decline with all the cracks, other than fuel oil, losing ground.
  • Margins are deemed to be weak, despite ongoing refinery downtime.


  • Overview inventories increased over the week with product stocks increasing, but crude stocks fell.
  • It was the second consecutive weekly crude inventory decline.
  • When it came to products, last week the large inventory build reflected weak reported demand.
  • US propane prices were flat on another huge stock build.
  • Ethanol production increased for the fifth consecutive week, the week ending June 6 to 944 000 bpd, the highest level so far in 2014.
  • Ethanol prices declined during most of the week ending 6 June due to greater production, rising inventories and lower corn costs.

Adapted for web by Claira Lloyd

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