New York, NY (PRWEB) January 15, 2013
NYC-based PIRA Energy Group reports that WTI’s discount to Atlantic Basin light crudes narrowed slightly in December. On the week, U.S. commercial oil stocks built, while the holidays noticeably affected Japanese oil data. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:
Global Oil Markets
*WTI Discount to Atlantic Basin Light Crudes Narrows
The WTI discount to Atlantic Basin light crudes narrowed slightly in December, beginning the move toward the single-digit discounts expected later this year. Light grades in Canada, North Dakota, and Wyoming strengthened on the prospect of improved 1Q13 fundamentals, while Canadian heavy grades and all Midland grades weakened on worsening 1Q13 fundamentals. U.S. crude and condensate production for October rose.
*U.S. Stocks Build Week-on-Week
U.S. total commercial oil stocks built the week ending January 4, with crude and the four major products showing the largest weekly build since 2009. Total commercial stocks are now back above the five-year range of U.S. oil inventories. This week, PIRA expects crude and the three major light products to build.
*Noticeable Holiday Effects in Japanese Data
Two weeks of data showed clear impacts from the holidays, and a degree of demand strength in gasoline, kerosene and fuel oil that led to stock draws at the end of 2012. However, those impacts reversed as 2013 began, and much softer demands, particularly in gasoil, led to stock builds in the week ending January 5.
*Saudi Formula Crude Prices for February: Responsive to Market
Overall, Saudi formula prices for February appear to be in line with market expectations, with only small changes that were directionally consistent with alternative crude economics. February formula prices for Asia rose relative to January prices. In contrast, February prices for Northwest Europe declined month-on-month, with the exception of for Arab Extra Light.
*U.S. Ethanol Production at Lowest Level Since 2010
The production of ethanol-blended gasoline the week ending January 4, was the lowest since February 2010, resulting from the lowest gasoline output since September 2008 and a sharp drop in the percentage of gasoline containing ethanol. Only 7.1 MMB/D of ethanol-blended gasoline was manufactured, down sharply from 7.8 MMB/D in the prior week. U.S. ethanol output rose to 826 MB/D from 807 MB/D in the previous week, as some plants picked up their production following the holidays.
The information above is part of PIRA Energy Group's weekly Energy Market Recap, which alerts readers to PIRA’s current analysis of energy markets around the world as well as the key economic and political factors driving those markets.
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