Crude stocks fell sharply in Cushing, Oklahoma, and PADD II in February, but then rose in all other regions. Further stock draws in Cushing should be supportive of WTI prices and structure.
New York, NY (PRWEB) March 11, 2014
NYC-based PIRA Energy Group reports that WTI rises as Cushing stocks Fall. On the week, U.S. stocks built, while Japan had large stock draws in both crude and products. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:
WTI Rises as Cushing Stocks Fall
Crude stocks fell sharply in Cushing, Oklahoma, and PADD II in February, but then rose in all other regions. Further stock draws in Cushing should be supportive of WTI prices and structure. Most crude differentials will continue to weaken in the short term due to refinery maintenance and growing production. But by midyear, new pipeline capacity will help drain crude from Canada, the Rockies and West Texas, as well as Cushing, with the Gulf Coast the primary recipient.
U.S. Stocks Build
For the first time this year both crude oil and petroleum product stocks built this past week. The stock deficit to last year narrowed to a still large 51.5 million barrels, or 4.7%. Crude stocks are now 17.5 million barrels below last year (30 million barrels below if looking at commercially available inventory), while the remaining deficit to last year is in middle distillates and other.
Large Japanese Stock Draws in Both Crude and Products
Total commercial stocks dropped partially due to draw on crude. Finished product stocks also fell. While there were modest changes to gasoline and gasoil demand, a jump in incremental exports for both allowed for a draw in stocks. Kerosene demand began to ease and the stock draw rate moderated. The indicative refining margin was modestly lower but remains near statistical means.
Latin American Refining Capacity Is Not Expected to Show Any Relevant Expansion in 2014
Latin America refining capacity is not expected to show any relevant expansion in 2014 so that production of both gasoline and diesel/gasoil will remain relatively steady compared to 2013, although lower runs will reduce refined product output. Local demand growth for diesel/gasoil will be met entirely by imports and imports of gasoline will grow while net exports of fuel oil will decline.
Sentiment Remains Bearish
Sentiment turned more bearish by the news that U.S. propane stocks built for the last week of February. However, this was largely due to the arrival of European shipments to the Northeast, and delays in exports once again due to fog. Lower prices, continuing cold weather and regular exports should lead to stock draws this month.
Ethanol Production and Inventories Decline
A seven-week low 894 MB/D of ethanol was manufactured the week ending February 28, down from 905 MB/D in the preceding week. Inventories fell by 413 thousand barrels to 16.6 million barrels, the lowest since early January.
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.
Click here for additional information on PIRA’s global energy commodity market research services.
PIRA Energy Group
3 Park Avenue, 26th Floor
New York, NY 10016