PIRA Energy Group analysis: Week ending 18th August 2013

PIRA analysis of oil market fundamentals in the week ending 18^th August 2013 indicate that:

China

• China GDP slowdown is underway. It is still unclear whether the predicted transition to slower, domestic led growth will be successful and smooth. While this may represent a vulnerability to demand growth (for all fuels), the increasingly volatile political transition in MENA could prove to represent a far more important vulnerability to oil and gas supply growth.
• The shale revolution continues to spread from the natural gas supply to the demand side of the balance as new markets emerge to take advantage of the growth of low cost North American production.

USA

• Total commercial stocks decreased in the week ending 9^th August, to a large extent offsetting the modest builds seen in the prior two weeks.
• Products increased despite lower refinery runs and lower product imports due to weaker reported demand.
• Crude stocks drew with Cushing crude stock draws accounting for half of the total draw. Cushing crude stocks are now down from last year’s all time high and are at the lowest level since the first quarter of 2012.
• Despite this week’s decline, stock excess to last year widened as there was a draw in this week last year.
• The storage deficit relative to last year is expected to widen as the pace of exports picks up and with a likely favourable crop drying season ahead.
• US ethanol margins and prices fell last week due to rising production, inventories and imports. Lower RIN prices also put downwards pressure on prices.
• The EPA finalized the renewable fuel standards for 2013 and stated that it would reduce the 2014 mandates in order for them to be achievable.
• Ethanol stocks were drawn by 291 000 bbls to 16.4 million bbls for the week ending 9^th August, erasing the build from the previous week.
• US ethanol production rose for the second straight wee, reaching 857 000 bpd from 853 000 bpd in the prior week, as several manufacturers maximised output prior to extended turnarounds planned for later in the month and during September.

Adapted from a press release by Emma McAleavey.

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/20082013/pira_energy_group_analysis577/