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Oil market recap: week ending 8 February 2015

Hydrocarbon Engineering,

PIRA Energy Group has said that midcontinent crude stock build has continued. The last week in the US saw the largest stock build of the year and in Japan, crude stocks drew sharply.


  • US commercial oil inventories increased, driving the year on year stock surplus.
  • The build was roughly equally divided between crude and products.
  • US inventories are up 27 million bbls, product stocks are down 4 million bbls and crude oil inventories are up 31 million bbls.
  • There are some 55 million bbls of the year on year surplus in crude oil.
  • The bulk of the produce surplus is in other products, but distillate inventories are now 21 million bbls over last year while gasoline is just 6 million bbls higher.
  • Last year the US shipped over 810 million gal. of fuel ethanol.


  • Crude runs eased slightly on the week.
  • Crude imports dropped sharply.
  • Finished product stocks were modestly lower.
  • Indicative refining margins remained strong.
  • The expected rotation out of middle distillate cracks and into gasoline appears to be taking shape slowly.

Freight market

  • Saudi Arabia continues to supple more crude oil than the market needs.
  • Saudi Arabia is pricing aggressively, especially to Asia, to defend its market share.
  • Iraqi production continues to grow as the government desperately seeks more revenue.
  • The above translates for tanker operators into more tanker demand for floating storage in the short term and from higher OPEC output and global crude trade as non-OPEC producers slash their capital expenses to adjust to the new low price environment.


  • Cracking economics plunged for all major feedstocks as their prices rallied amidst stable steam cracker product prices.
  • Spot propane margins fell by nearly 20%, but became the most profitable feedstock.
  • Butane margins swooned 25% week on week.
  • Naphtha cracking margins fell by 35$.
  • The changes place spot European olefin manufacturing economics some distance behind those in Asia and North America.

Edited from press release by Claira Lloyd

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