NYC-based PIRA Energy Group reports that the April rate of U.S. inventory increase is historic. In the U.S., stocks built while in Japan inventories drew. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:
Another Huge U.S. Stock Build
Commercial oil inventories increased for the week ending April 18, following the stock increase for the week earlier. So far, the April rate of inventory increase is historic. It will substantially moderate for the rest of the month, but will still end up being a rather large inventory increase.
Japanese Inventories Draw Due to Lower Crude Stocks
Total commercial stocks drew due to a draw on crude. Finished product stocks were modestly higher. There is still demand impairment from the April 1st consumption tax increase, though that impact lessened this past week with modestly higher gasoline, gasoil, and kero demands. The indicative refining margin was modestly higher and margins remain good.
Rising Freight Rates Affect Markets
The pace of U.S. propane stock building is increasing, even as exports are sustained at high levels. Ethane usage is affected by cracker downtime, but will be increasing over the next couple of months. Freight rates keep increasing leading to weakening of spot arb margins while some cargoes are being redirected to shorter haul routes, as the emphasis shifts to more efficient operations.
Ethanol Prices Fall
U.S. ethanol prices dropped to the lowest level in over four weeks on April 16 as production rose to the highest level of the year. Values were significantly below gasoline again, after selling at a premium just two weeks ago.
Ethanol Output Declines
U.S. ethanol production fell to 910 MB/D during the holiday-shortened week ending April 18, down from an 18-week high 939 MB/D during the preceding week. Despite the decline, this was the third highest output thus far this year as the weather improved and logistical problems eased.
Nigeria: Risks to Oil Supply Disruptions and Long-Term Growth on the Rise
Risks to Nigerian crude supply are on the rise in both the near and long term. In the near term, oil infrastructure sabotage may increase ahead of the February 2015 elections, adding to existing oil theft and pipeline vandalism. In the longer term, growth remains challenged. Persistent insecurity has led to a broad exit of foreign oil companies from vulnerable areas, and a highly uncertain regulatory climate due to the long-delayed Petroleum Industry Bill has stalled investment in the deepwater.
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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