NYC-based PIRA Energy Group believes that the current global setting as conducive to growth and expects a springtime rebound in economic activity. In the U.S., stock excess is about flat. In Japan, crude stocks draw and product stocks move higher. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:

World Oil Market Forecast

While economic worries remain, PIRA judges the current global setting as conducive to growth and expects a springtime rebound in economic activity. The magic of price is working on both oil supply and demand; balances are tightening. This is occurring at the same time the Middle East is mired in sectarian conflict.

U.S. Stock Excess about Flat

This past week’s inventory build approximately matches last year’s build for the same week, leaving stocks 167 million barrels, or 15.5%, higher than last year. The overall composition of the build did not change relative to last year so products are still 75 million barrels higher (11%) while crude is 92 million barrels (23%) higher than last year. Some 61% of the product excess is in NGLs.

Japanese Crude Stocks Draw, Product Stocks Move Higher

Crude runs eased slightly and crude imports declined, producing a stock draw. Finished product stocks built mostly on a rise in naphtha stocks. Gasoline and gasoil demands were lower, with slight stock changes for each. Kerosene stocks drew again fractionally as the heating season closes out. The indicative refining margin remains good and was little changed on the week.

European LPG: Supply Weighs, Demand Wanes

European LPG prices were sharply lower as buyers remained quiet while supply continues to weigh on markets. Cash cargo sized lot prices lost 9% on the week to print near $380/MT, just $2 below June swaps, and at a $175 discount to regional naphtha. Butane prices were mixed, with coaster batch prices losing ground but larger cargoes improving to $445. Current LPG prices are now so attractive that petrochemical feedstock buyers will likely look to maximize runs in the coming weeks, wherever possible.

U.S. Ethanol Output Drops

Ethanol production dropped to a six-month low of 921 MB/D during the week ending April 24 as several plants were offline for spring maintenance. PADD II output declined to 834 MB/D while production outside of PADD II climbed to a record 87 MB/D.

U.S. Ethanol Prices and Manufacturing Margins Gained in April

Ethanol prices climbed during April, supported by rising petroleum values and robust demand in both the domestic and export markets. Manufacturing margins improved as corn costs fell.

The information above is part 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.