Oil market recap: week ending 21 December 2014

PIRA Energy Group said that the drop in crude prices being observed is not sustainable. In the US commercial stock excess is continuing to expand and in Japan, both crude and finished product stocks have drawn.

Crude prices

• Over time, PIRA expect the loss in global liquids at Brent prices below US$70 /bbl to cause non-OPEC growth to halt.
• Global demand growth however will be rejuvenated.
• There are going to be some lasting impacts from the price slip, particularly on the cost side.
• PIRA expects industry to find ways to maintain profitability during the next few years of low prices via cost efficiency steps, productivity improvements and pressure on suppliers.
• At very low crude prices some existing US and Canadian production will become uneconomic.
• The collapse in global oil prices has raised serious concerns about the possibility of a Venezuelan default and highlights continued economic hardship in the country.

USA

• Total commercial stock build increased the commercial stocks excess to the widest levels of 2014.
• The surplus was a sharp contrast to the commercial stock deficits that persisted in the first half of last year.
• LPG prices outperformed the broader crude and gas markets over the weeks before the report cut off.
• Ethanol prices trended downwards for a third week due to record production, rising inventories, weakening demand and collapsing petroleum values.
• Manufacturing margins for ethanol worsened as corn costs increased.
• Ethanol production hit a new record level.
• Stocks of ethanol remained near a seven week high, declining by only 91 000 bbls.

Japan

• Crude runs were marginally lower on the week.
• Finished product stocks drew, with approximately half being in jet/kerosene stocks.
• Gasoline demand was slightly lower with higher yields such that stocks built slightly.
• Gasoil demand was higher, but higher yield and lower incremental export built stocks.
• Kerosene demand rose sharply and stocks drew.
• The indicative refining margin was weaker.

Read the article online at: https://www.hydrocarbonengineering.com/refining/02012015/oil-market-recap-21-dec-14-end/