NYC-based PIRA Energy Group reports that the global economy continues to improve. On the week, the U.S. stock decline moderated. In Japan, runs continue rising, key product demands are stronger. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:

Global Economy Continues to Improve

The global economy continues to improve, setting the stage for relatively strong oil demand growth next year. Fourth quarter global balances are tight and support ongoing price strength. Bearish supply darkens the 2014 price outlook, but PIRA reckons the downside will be limited with Saudi Arabia able to balance the market. The weakness will be felt mostly in the first half 2014 because of seasonal demand weakness and crude inventory builds.

U.S. Stock Decline Moderates

Overall commercial inventories fell slightly this past week, after four prior weeks of declines averaging 8.0 million barrels per week. Crude stocks built as crude imports stayed stubbornly high, especially from the Middle East. Product stocks drew as higher product supply and lower reported demand reduced the week-on-week product inventory decline. The year-on-year inventory excess remained modest, with the excess mostly in crude, largely related to new infrastructure associated with rapidly expanding North American production. 

Japanese Runs Continue Rising Post Turnaround, Key Product Demands Stronger

Runs continued rising post-turnaround but crude imports moved strongly higher and stocks built 3.1 MMBbls. Both gasoline and gasoil demand displayed decent gains and inventories of both drew. Kerosene demand remained strong and stocks continued drawing. Refinery margins, again, moved slightly higher. 

Scramble for LPG Supply Continues

U.S. propane stocks continue to draw at a rapid pace and are expected to end the year well behind last year's level.  International LPG prices are reaching record levels amidst significant supply disruptions. 

Ethanol Output Matches Yearly High

U.S. ethanol production rebounded the week ending November 22, equaling its annual high of 927 MB/D, which had been reached two weeks earlier.  Inventories declined by 61 thousand barrels to 15.02 million barrels, only slightly higher than the three-year low of 14.96 million barrels reported near the end of October. 

Ethanol Prices and Margins Spike in November

In November, U.S. ethanol prices and manufacturing margins skyrocketed to the highest level in two years, but gave back some of the gains last week. Very low inventories and a shortage of railcars to take ethanol to the blenders drove the market up. Companies are reluctant to hold stocks with the market in severe backwardation.

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. 

Saltire Energy, supplier of drilling tools to the offshore oil & gas industry, has posted its annual results (year end to June 30, 2013) with turnover up more than 50% from £21.5million to £32.9million.

Operating profit for the year has also risen from £14.1million to £18.5million.

Mike Loggie, Chief Executive of Saltire Energy, said: "The last 12 months has seen steady growth in our business in the UK and across our international operations.

"As a company, our focus is on delivering high quality equipment and services for our clients and we have seen a significant rise in our activities in the Middle East, Africa, Asia Pacific, the UK and North Sea. This has supported growth in our turnover across the company.

"Over the coming months, we plan to increase our footprint in Aberdeen with the expansion of our facilities in Portlethen and expand our presence in Europe with the opening of a further base.

"Developing our equipment inventory has been a strong focus and last year we invested £10million back into the business, which we have done again in 2013 to extend our suite of industry accredited drilling tools and pipe. This allows us to continue to meet the needs of our clients and fuel further growth of the business."

Since the company was established in 1986, it has developed a strong reputation for delivering high quality customer service and flexibility, increasing its global presence through strong industry networks and agent partnerships.

Mike continued: "The company would not be where it is today without the skills, expertise and commitment of our team. Earlier in the year we further strengthened our management structure with the appointment of Craig Mitchell as a director. We have bolstered our staff numbers with the addition of 10 new personnel, taking our workforce to 52, with plans to grow this further in the next 12 months."

Saltire Energy has also maintained its commitment to the community with support for local charity Befriend a Child and has financially supported the Saltire Sports for Schools initiative to date, contributing £500,000 to the project, with this figure likely to rise year on year by approximately £50,000. This has enabled approximately 2,000 children from five local primary schools, some of which are located in the city's designated regeneration areas, to develop their sporting and interpersonal skills at Aberdeen Sports Village's state-of-the-art sporting environment.

The company is also a major funder of the Aquatics Centre, one of only two Olympic standard facilities in Scotland, which is set to open in early 2014.

Saltire Energy is also a strong supporter of the university scholarship programmes and sponsorship of Open Champion and Ryder Cup hero Paul Lawrie.

NYC-based PIRA Energy Group reports that improving VMT and trucking trends confirm better highway fuel demand growth. On the week, U.S. product stocks declined again, while in Japan crude stocks built. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:

 Improving VMT and Trucking Trends Confirm Better Highway Fuel Demand Growth

The Federal Highway Administration recently released vehicle miles traveled (VMT) data for August, while the American Trucking Association released its Truck Tonnage Index for September.  Both indicators showed improvements versus year-ago, and this confirms the improvement in both gasoline and estimated on-highway diesel demand growth.  PIRA's forecast through year-end, for both gasoline and diesel, suggests that both these indicators from FHA and ATA should continue their improving trend. 

Another Huge U.S. Product Inventory Decline

Overall commercial oil inventories in the United States fell almost 6 million barrels for the week ending November 8, with a product inventory decline more than offsetting a crude stock increase. Product inventories have declined for nine consecutive weeks, falling over 42 million barrels but are expected to moderate over the next few weeks. With crude runs strongly moving up, this should translate into crude stock declines, particularly at the Gulf Coast. The stock excess to last year narrowed this past week. 

In Japan, Runs Continue Rising, Crude Stocks Build

Runs continued rising post-turnaround and crude imports stayed sufficiently high to produce another large crude stock build. Gasoline and gasoil demands eased but their yields were notably lower so stocks of both were only modestly changed. Kerosene demand eased slightly but yield jumped such that stocks resumed building. Refinery margins moved slightly higher as light and heavy cracks showed modest improvement. 

Tight LPG Markets

U.S. propane markets remain quite tight as crop drying, exports, petchem feed use and meeting winter needs combine to pull stocks lower. Propane has reached its highest value relative to WTI so far this year. Various supply limitations are helping pressure international prices higher just as winter weather is approaching. LPG has been priced out of the chemical feedstock pool.

U.S. Ethanol Prices Decline

Most ethanol prices declined early the week ending November 8 before advancing thereafter due to strong domestic and export demand, as well as higher corn prices. Cash margins for ethanol manufacture fell to the lowest level in 11 weeks.

EPA Proposes Biofuel Requirements for 2014

Friday afternoon, the EPA issued a regulatory announcement that proposes to substantially reduce the 2014 biofuel requirements set forth in the Renewable Fuel Standard (RFS2). The Agency proposed specific volumes and is soliciting comments for selecting a value from specified ranges for total, advanced and cellulosic biofuels. 

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.