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PIRA Energy Group analysis: Week ending 16 May 2014

Hydrocarbon Engineering,

PIRA Energy Group analysis of oil market fundamentals for the week ending 25 May revealed the following:


  • Tighter global oil markets will send third quarter crude oil prices into a new, higher trading range for Brent.
  • Low inventories and increased and increased global supply disruptions have supported prices despite a larger than expected second quarter stock build.


  • Ethanol prices increased near the end of the week as the market in the Midwest tightened.
  • Manufacture of ethanol-blended gasoline reached an all time high, while PADD II stocks fell to the lowest level of the year.
  • Ethanol production rose in the week ending 16 May, reaching 925 million bpd for only the second time this year. However, total US inventories drew 312 000 bbls to a four week low of 16.99 million bbls.

Q1 results

Four themes emerged in the first quarter results:

  • Operators indicated that 2014 production would be weighted to the second half of the year as harsh winter weather continued well into Q1 2014.
  • In the Permian, drilling activity increased rapidly despite the weather, resulting in some service cost inflation.
  • In Bakken and Eagle Ford, operators are still focused on increasing acreage productivity, with emphasis on downspacing and completion designs.
  • A number of operators divided their attention between the three bug plays and emerging plays.

Bullish for US prices

  • June Saudi loading delays and reduced operational tolerances should continue to be bullish for US prices. Lower freight rates have opened the arb to Europe and Asia encouraging increased exports. Continuing stock build should erode the year on year deficit in US LPG stocks.

  • Adapted from a press release by Emma McAleavey.

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