Brent crude prices will recover, although PIRA has lowered its forecast over the next few months. Demand picks up seasonally and global refinery runs will increase with high utilization in the United States and modest recovery in Europe.
New York, NY (PRWEB) August 05, 2014
NYC-based PIRA Energy Group believes that Brent crude prices will recover, although PIRA has lowered its forecast over the next few months. In the U.S., crude stock declined modestly. In Japan, crude runs rose and stocks posted a modest draw. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:
European Oil Market Forecast
Brent crude prices will recover, although PIRA has lowered its forecast over the next few months. Demand picks up seasonally and global refinery runs will increase with high utilization in the United States and modest recovery in Europe. The risk of further supply disruptions remains high from ongoing political turmoil, particularly in Libya and Iraq, despite the apparent complacency in markets today. Also, North Sea production maintenance peaks in August/September and there is U.S. hurricane risk through October.
Modest U.S. Commercial Stock Decline
Crude inventories continued to decline outpacing the product stock increase. Inventories are now just 8 million barrels higher than the year earlier. Middle distillate is the tightest part of the barrel and crude inventories are also relatively snug, when considering the very high crude run rates and the required stocks for the shale infrastructure build out.
Japanese Crude Runs Rise, Gasoline Demand Rises Nicely
Runs continued to rise in line with declining maintenance activity. Crude imports eased back and crude stocks posted a modest draw. Finished product stocks rose slightly. Gasoline demand rebounded and approached 1 MMB/D. Refining margins were softer with all the cracks easing, and gasoline posting the largest decline.
U.S. LPG stock Replenishment Continues
Total U.S. inventories of propane grew by 1.78 MMB in the latest data released by the Dept. of Energy. This week’s build was the lowest seen since the week ending April 18th. Higher exports after recent expansions are the likely culprit for the lower builds. Nevertheless, U.S. propane stocks are only 3 MMB shy of the 5 year maximum for this week of the year, and look to take out this record in the coming weeks.
U.S. Ethanol Stocks Soar to a 16-Month High
U.S. ethanol inventories jump to an annual high 18.6 million barrels the week ending July 25, up 647 thousand barrels from 17.9 million in the previous week. Production declined slightly last week to 954 MB/D, but was still the third highest output since December 2011.
U.S. Ethanol Prices Fall
U.S. ethanol prices increased during most of July despite rising production, as robust demand provided support. However, inventories soared to a 16-month high last week and as a result, the market gave back all the price gains realized during the month.
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.
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