PIRA Energy Group has said that low oil prices and cheap money will lead to stronger global economic growth and much stronger oil demand. In the US, stock surplus has once again widened. In Japan, Crude runs rose slightly and crude imports rose to produce a crude stock build.
- Low oil prices and cheap money will lead to stronger global economic growth and much stronger oil demand than conventional wisdom would suggest.
- For the next six months, oil supply will continue to overwhelm demand.
- The above is partly due to rapid growth in Iraqi production as its government seeks more revenue.
- Wide contango will further widen as crude oil stocks in the three major OECD markets fill to the brim and floating stocks keep on increasing.
- US commercial oil inventories are now at 125 million bbls.
- Crude stocks increased strongly while products drew.
- So far in January, the overall inventory increase has been the largest since 2009.
- Despite a colder than usual January, the northeast of the US is not seeing much in the way of substitution of oil for natural gas.
- Oil consumption will be substantially below year ago levels despite roughly comparable weather.
- During the first week of January ethanol price fell to the lowest level in almost 10 years.
- Ethanol inventories built, and margins dell to the worst level in two years during the first week of January.
- Economics for the ethanol sector did improve in the second half of January.
- Regional naphtha rallied to the highest levels of the year as high cracker runs, increased gasoline blending and arbitrage cargoes to Asia have pulled NEW stocks down.
- Cash butane barge lots rallied by 16% on stronger naphtha and as Shell’s Pernis refinery restarted an alkylation unit.
- Large propane cargoes followed suit, gaining 4% last week.
- Crude runs rose slightly on the week.
- Crude imports rose to produce a crude stock build.
- Finished product stocks fell with a strong draw on kerosene and lesser draws for gasoil and gasoline.
- Indicative refining margins remain strong.
Edited from press release by Claira Lloyd
Read the article online at: https://www.hydrocarbonengineering.com/refining/04022015/oil-market-recap-week-1-feb/