Oil Market Oil Market to Remain Weak Despite Economic Recovery
Although analysts and market researcher see a slow recovery of the global economy, the oil market will remain weak, the energy experts of Pira expect. Non-OPEC supply will significantly outpace demand in 2013, causing core OPEC countries to cut production to balance markets.
New York/USA – While the global economic backdrop continued to improve, oil market fundamentals are weakening: Although the economic recovery provides a positive backdrop for oil prices and other risk assets, especially as production in Asia and the Americas is still on high levels.
Crude Stocks Are Well Filled
Generally, the global crude stocks and reserves draw during the winter, followed by a large inventory build in crude and products in January. The Pira expects a draw for light products from February onward.
As domestic production in the US is still growing swiftly, the demand for Atlantic Basin oil and crude imports is likely to drop into mid–2013. Also the US used a period of weak demands to fill up its crude stocks just before Christmas 2012.
Ethanol Production Drops as Prices Give In
Despite these trends, especially the Canadian pipeline infrastructure worries the analysts that believe it could not cope with the anticipated oil production. Expansion projects and new pipelines to customers in the US are currently subject of political discussion in Canada.
Ethanol saw a sharp price decline during December as corn prices gave in significantly. In Mid December, the US produced 822 million barrels of ethanol per day, much less than 2011 (943 million barrels/day). Imports of Brazilian sugarcane-based ethanol rose to 37 million barrels/day from 12 million barrels/day.