PIRA Energy Group summarises the findings of its weekly oil market recap:
Brent crude prices have stayed strong this month, supported by reasonably tight global supply demand balances and low inventories. In coming months, refinery maintenance is predicted to cut crude demand, while supply continues to grow leading to lower Brent prices in coming months.
The US experienced its first crude inventory increase in eight weeks, largely caused by low crude runs. Reported demand increase and increased product imports were also influential factors. The past week’s overall inventory change was 1.3 million bbls larger than the inventory decline for the same week last year, widening the year on year stock deficit. Meanwhile, commercial oil inventories are declining significantly.
Ethanol prices resumed their downward trend in the week ending 17th January as improving weather in the Midwest led to higher operating rates and reduced transportation problems. Manufacturing cash margins have fallen as a result of the decrease in ethanol and co-product values.
A relatively high crude import rate produced a crude stock build on slightly lower runs. Slightly higher stock builds were registered on all the major products (mogas, gasoil, naphtha, jet, and fuel oil) though kerosene stocks drew seasonally.
Oil demand has slowed substantially from 2012. The reasons for this are not clear; the pace of GDP growth did not slow between the two years, and physical indicators that can be directly tied to oil demand (such as vehicle sales, ethylene production, and air travel) recorded healthy increases last year.
Adapted from a press release by Emma McAleavey.
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