PIRA Energy Group has said that so far, market sentiment has deteriorated more than oil balances. Over in the US, commercial stocks are flat on the week while the EIA revises down US crude output. While in Japan, crude runs recovered and stocks built.
- The back of the market has led prices lower as speculators are no longer convinced higher oil prices are required to balance future oil supply and demand.
- Increased crude production in the US and Canada has significantly reduced US imports of Latin American crudes.
- More Latin American crude moved to Asia, mainly India and China.
- Latin American gasoline/diesel product imports will rise even with new refinery startups, and the US will supply the vast majority.
- Unplanned/planned outages at refineries in the near term in Venezuela and Mexico along with seasonal demand impacts are adding to Atlantic Basic product strength in Q3 of this year.
- A 4.2 million bbls commercial crude stock draw offset a similar sized product inventory build, leaving stocks virtually flat on the week.
- The EIA revised down its Lower 48 crude production.
- Ethanol production has declined for three consecutive weeks.
- Ethanol prices were volatile in July, rising early in the month but then falling sharply.
- Ethanol manufacturing bottomed mid month after declining for nine consecutive weeks.
- Ethylene prices in Chain and Southeast Asia fell over 20% in July.
- Exports from the mainland increased as poly plants slowed on greater uncertainty in the local economy.
- Chinese exports are facing muted demand in the north where prices are falling.
- Supplies are likely to continue rising and prices fall, as long as ethylene production margins remain robust.
- Crude runs and imports rebounded following the typhoons.
- Crude stocks surged, while finished product stocks rose only slightly.
- Gasoline and gasoil stocks were marginally lower.
- Kerosene stocks continued building, though at a slower rate.
- The indicative refining margins has come well off its June peak, though it is in the upper half of its statistical range.
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