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Oil market recap: week ending 4 January 2015

Hydrocarbon Engineering,

PIRA Energy Group has said that it is too early to get long oil and in the US the stock surplus has jumped.

Long oil

  • PIRA expects the bulk of 1H15 inventory builds to be in crude oil.
  • As crude inventories build, more expensive storage will be required which will relatively weaken prices.
  • The above could be mitigated, according to PIRA, by an increase in demand from the current depressed levels.
  • Such an increase in demand is unlikely to be strong enough to offset the weight of the impending increase in inventory supply.
  • In this environment it is difficult for crude oil prices to rally.


  • The global imbalance between supply and demand compared to last year is apparent in the US stock data.
  • 2013 stocks decreased this week past while in 2014 they increased.
  • Crude stocks are now 25 million bbls higher than in 2013, having begun the quarter 7 million bbls lower.
  • From deficits last year beginning the fourth quarter, gasoline and distillate stocks are now higher.
  • Permanently closed refineries have had a significant affect in lowering crude run demand and subsequent gasoline and distillate production.

Latin America

  • Refinery runs will increase in 2H15 driven by the startup of a new refinery in Brazil and the restart of revamped capacity in Colombia.
  • Product import will level off, breaking the growth trend of the last few years.
  • The primary supplier of products for import into the region will remain the US.


  • Recent economic performance in the country has been a bit disappointing.
  • Growth prospects have improved, however, as lower oil prices will allow households and businesses to increase spending and the central bank to loosen monetary policy.
  • End user oil prices dropped sharply in recent months, including those for diesel.

Edited from press release by Claira Lloyd

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