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Oil market recap: week ending November 30 2014

Hydrocarbon Engineering,


PIRA Energy Group has said that China and India SPR is to add oil in 2015. When it comes to the US, commercial stocks drew and in Japan, crude runs rose.

Worldwide

  • China and India are each expected to add to their Strategic Petroleum Reserves (SPR) next year.
  • Additions to SPRs is however expected to be limited by capacity availability.
  • There is too much supply relative to demand at anything near US$100 /bbl for Brent.

Saudi Arabia

  • Under current conditions, cutting output to support price would be self defeating, making the structural imbalance even worse.
  • Global price elasticity of oil demand and supply is very low, however the price elasticity faced by Saudi, a swing producer, is much higher.
  • Saudi is expected to absorb 100% of the swing in the call on OPEC.
  • Medium term elasticity faced by the Saudis is likely greater than 1, meaning that their export revenue will fall in response to a price increase.
  • The Saudi decision on production volumes will not be based solely on export revenue maximisation.

Japan

  • Crude runs rose incrementally out of turnarounds.
  • Crude imports were higher and crude stocks built.
  • Finished product stocks drew marginally due to draws on gasoline and naphtha.
  • Gasoline demand was higher, as expected, due to the holiday.
  • Gasoil demand was marginally lower, and stocks built modestly.
  • Kerosene demand was slightly higher, but stocks still built a bit.

USA

  • US ethanol manufacture set new records in the week ending November 21.
  • Ethanol prices and manufacturing margins skyrocketed during November despite record ethanol production.
  • Ethanol inventories have gotten extremely low as output has been light for several months when companies shut down for maintenance turnarounds.

Edited from press release by Claira Lloyd

Read the article online at: https://www.hydrocarbonengineering.com/refining/02122014/oil-market-recap-30-nov/


 

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