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Oil market recap: Week ending 26 October 2014

Hydrocarbon Engineering,

PIRA Energy Group has said that it believes that cyclical strengthening is currently underway in the global economy with the US in a better position to support global growth. When it comes to the US, stock excess modestly widens and in Japan, crude runs have eased.


  • The inventory increase last week was slightly larger than in the same week last year.
  • Crude oil stocks still remain at 2.1 million bbls below levels year on year.
  • Middle distillate stocks are 1 million bbls below year on year and gasoline is 11.1 million bbls below.
  • One product category is showing a large surplus and that is ‘other’ which consists primarily of NGLs.
  • Cash margins for ethanol manufacture rebounded the week ending 17 October.
  • On Friday 24 October, ethanol was US$ 1.78 /gal. in Chicago.
  • Ethanol inventories have declined for three consecutive weeks.
  • Ethanol production rebounded the week ending October 17.


  • Crude runs eased last week.
  • Crude imports declined sufficiently to draw crude stocks moderately.
  • Gasoline demand was modestly higher, and stocks posted a small draw.
  • Gasoline demand was weak, but lower yield tempered stock build.
  • Kerosene demand continued to run at seasonally low levels with higher yield, which boosted the stock build rate.
  • Refining margins remained soft with all the major product cracks, except middle distillates, weakening.


  • PIRA expect shale oil production to be relatively sensitive to oil price drops, but with a slight delay.
  • A price lower than US$ 80 on an LLS basis will reduce production, but this will emerge slowly in the first year.


  • Cyclical strengthening is underway in the global economy.
  • OPEC cannot rebalance oil markets because the surplus is too large.
  • Oil markets will have to be rebalanced via price.
  • The market will see greater contango but prices in the front of the market will inevitably be anchored by bullish medium term oil supply/demand balances.

Edited from press release by Claira Lloyd

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