Oil market recap: Week ending 16th March 2014

PIRA’s weekly analysis of oil market fundamentals has revealed the following:

USA

• The Permian basin is now being targeted for tight oil production, using horizontal drilling and hydraulic fracturing. To date, production growth in the Permian more closely resembles the steady increase seen in Bakken than the rapid growth from Eagle Ford.
• Crude tanker rates dropped. The Baltic dirty tanker index doubled from 674 at the end of November 2013 to 1.344 on 20^th January, before dropping back to 676 recently.
• Ethanol prices have increased recently as corn values rose to the highest values since September. Product was tight with prices at the coast reaching seven year highs.
• Ethanol manufacturing cash margins reached the highest level in 10 weeks.
• Propane storage will finish the heating season at a low level.
• As the heating season winds down, more chemical usage will be needed in overseas markets and LPG is being priced to displace naphtha.

Maintenance

Crude runs hit a low for the year in the past week, due to the refinery turnaround period. Despite this, runs are still well above year ago levels as advantaged crude provides US refiners with good margins. Crude stocks had a very large build.

Japan

• Total commercial stocks dropped on the week.
• Crude stocks fell.
• Finished product stocks were only slightly altered.
• Gasoil stocks fell to a new yearly low and remain lean.
• The kerosene stock draw rate moderated as demand eased and yield rose.
• The indicative refining margin was modestly higher with gains in gasoline cracks more than offsetting lower cracks in other products.

Adapted from a press release by Emma McAleavey.

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/18032014/pira_energy_oil_market_recap281/