PIRA Energy Group's Weekly Oil Market Recap - July 14th 2013

PIRA Energy Group's Weekly Oil Market Recap for the Week Ending July 14th, 2013

NYC-based PIRA Energy Group believes that the tragic derailment in Quebec won’t halt oil-by-rail. On the week, U.S. Commercial Oil Stock Drew.  In Japan, stocks also drew on holiday impact boosting demand. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:

Tragic Derailment in Quebec Won’t Halt Oil-by-Rail

The July 6th deadly derailment of a crude train in Quebec has given rise to an intense debate whether it is safer and less environmentally damaging to move large amounts of crude oil by train or by pipeline. The Quebec derailment is a terrible tragedy, but it will not stop the use of trains for oil transportation or prevent future growth. PIRA expects no significant impact on the volume of rail shipping in the U.S. and in Canada.

Big U.S. Commercial Oil Stock Draw

Another huge crude stock draw more than offset a product inventory increase, leaving overall commercial oil inventories down for the week ending July 5. This past week's stock decline narrowed the year-on-year inventory excess which has halved in the last two weeks. Crude stocks are now below last year, the first year-on-year negative comparison this year.

Japanese Holiday Impacts Boost Demand While Crude Stocks Draw

Pre-holiday gasoline and gasoil demands were both strong, while yields on both were lower, thus drawing stocks. Crude stocks drew moderately as imports remained low. Gasoil stocks remain tight and supportive of cracks. Refinery margins continued to post gains as stronger light product cracks, again, offset weaker fuel oil cracks.

LPG Exports heading to Latin America from USGC

High ethane and propane stocks remain an impediment to prices although exports are keeping propane storage lower than last season. Most product is now flowing to Latin America with other cargoes having been pulled to Asia, but a shift to Europe could be in process.  

Ethanol Blending Reaches All-Time High

U.S. ethanol prices rebounded the week ending July 5 due to a tightened market. Ethanol blending reached an all-time high, but production fell to the lowest level in about six weeks. As a result, ethanol stocks were the lowest since October 2009. RIN values for both grain-based and sugarcane-based ethanol were at or near all-time highs.

Some Ethanol Plants Will Run Out of Corn

U.S. ethanol output rose to 881 MB/D during the holiday-shortened week ending July 5th, up from 863 MB/D in the preceding week. This bump in production will be short-lived as many plants in states like Indiana and Illinois, which have suffered through two consecutive bad crop years, are running out of corn.  

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.

ENDS

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