Oil Price Stays Strong Oil Price Will Remain High Through the Winter
With low stocks and inventories for petro–products, the oil price will remain high throughout the winter. A change is expected for the second quarter of 2014, when refineries go back on stream and inventory stocks return to high levels.
Brent crude prices have stayed strong this month supported by relatively tight global supply-demand balances and low inventories but will trend lower later this quarter as refinery maintenance cuts crude demand, crude supply continues its unrelenting growth in the United States, and supply disruptions elsewhere directionally ease.
U.S. Products Draw While Crude Stocks Build
Surprisingly low crude runs were largely responsible for the first crude inventory increase in eight weeks. They also contributed to a larger product stock draw versus the week earlier. A reported demand increase and increased product imports were also factors in the week-on-week product stock change. This past week's overall inventory change was 1.3 million barrels larger than the inventory decline for the same week last year, thereby widening the year-on-year stock deficit. U.S. commercial oil inventories are declining significantly this January and this has happened just once in the last ten years.
Another Jump In Japanese Crude Stocks
Another relatively high crude import rate produced a crude stock build on slightly lower runs. Modestly higher stock builds were registered on all the major products (mogas, gasoil, naphtha, jet, and fuel oil), though kerosene stocks drew seasonally. Margins were slightly softer with weaker light product cracks overshadowing higher fuel oil cracks.
U.S. Propane Is Continuing To Exert Price Leadership
U.S. Propane is continuing to exert price leadership although developments in the mid-continent are certainly in a state of disequilibrium given high demand for tight supplies. The wide gap to the Gulf Coast is certainly encouraging flows north with the price level leading to demand destruction.