PIRA Energy Group has said that pessimism about oil prices because of the Iran nuclear deal and economic concern in China and Europe is over exaggerated. When it comes to the US the group has said that the stock excess has modestly widened and in Japan, crude runs are continuing to rise while product stocks rise on lower demand.
- Brent crude prices lost ground over the last few weeks.
- Near term crude oil fundamentals have been tightening with high refinery runs this summer.
- With crude stock declines, prompt prices have strengthened as expected.
- Gasoline cracks are very strong and should remain healthy for the next few weeks at least but will continue to decline from their seasonal peak earlier this month.
- Diesel cracks will continue to erode over the next one to two months before seeing some seasonal recovery.
- Recent European refinery margin strength, the best in many years, will fall below last year’s levels by 4Q15.
- 2.8 million bbl inventory increase was 1.6 million bbls larger than the build last year for the same week.
- Product excess narrowed by 1.6 million bbls.
- Crude excess widened by 3.2 million bbls despite the past week’s substantial crude inventory decline.
- Mont Belvieu LPG prices stood strong for a second week despite sharply lower broader energy market pricing.
- Ethanol prices rose slightly the week ending July 10.
- Ethanol blended gasoline production declined sharply to a six week low the week ending July 10.
- Crude runs posted a second straight significant rise as maintenance continues to wind down and unplanned outages have restarted.
- Crude imports fell back.
- Finished products built with gasoline, gasoil and kero demands falling.
- The indicative refining margins remained good and little changed.
- Stronger gasoline cracks offset declines in the other major cracks.
- Believe incremental Iranian oil will hit the market in the second quarter of 2016.
- Once sanctions are lifted, expect Iranian crude production to rise rapidly.
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