Total liquid fuels inventories return to five-year average levels in the United States and the OECD
The extended period of oversupply in global petroleum markets that began before the Organization of the Petroleum Exporting Countries (OPEC) November 2016 agreement to cut production has ended, and the large buildup of global inventories during that period has now been drawn down. As OPEC plans to reconvene on June 22, markets now appear more in balance, but uncertainty remains going forward.
The November 2016 OPEC supply agreement took effect in January 2017, whereby OPEC member countries agreed to reduce crude oil production by 1.2 million barrels per day (b/d) compared with October 2016 levels and to limit total OPEC production to 32.5 million b/d. In addition, Russia agreed to reduce its crude oil production. OPEC extended the agreement in November 2017, with the production cuts remaining in place until the end of 2018.
Since January 2017, one of the primary indicators of a tightening world oil market has been a decline in crude oil and other liquids inventories. After sustained increases in quarterly global liquid inventories from mid-2014 through most of 2016, inventories declined throughout 2017 and into the first quarter of 2018 (Figure 1).
Data for global petroleum inventories are not collected directly. Instead, increases or decreases in global inventories are implied based on the difference between world production and world consumption estimates. However, inventory data for the United States and for countries within the Organization for Economic Cooperation and Development (OECD) are available and can indicate what is happening globally.
From January 2017 to April 2018, U.S. crude oil and other liquids inventories decreased by 162 million barrels while OECD inventories decreased by 234 million barrels. Over this same period, U.S. and OECD crude oil and other liquids inventories moved from 229 million barrels and 334 million barrels, respectively, higher than their five-year averages to 16 million barrels and 2 million barrels lower (Figure 2).
Between the first quarter of 2017 and the first quarter of 2018, estimated total world petroleum and other liquids production rose 1.6 million b/d. OECD petroleum and other liquids production rose 1.3 million b/d, and most of this growth came from increased crude oil production in the United States, which increased by 1.2 million b/d, from 9.0 million b/d to 10.2 million b/d. Total OPEC petroleum (crude and other liquids) production increased by 0.4 million b/d over this period. Total OPEC crude oil production remained lower than the 32.5 million b/d agreement level, increasing 0.27 million b/d to 32.4 million b/d.
Total world petroleum and other liquids consumption, on the other hand, increased by an estimated 1.9 million b/d between the first quarters of 2017 and 2018, exceeding the growth in production and resulting in inventory declines. This consumption growth occurred primarily in the United States (0.6 million b/d), China (0.5 million b/d), and other Non-OECD Asia (0.6 million b/d) (Figure 3).
The days of supply measure (current inventory level divided by next month’s estimated consumption) provides additional insight into market balances. Between January 2017 and April 2017, U.S. and OECD crude oil days of supply fell by 11.5 and 4.5 days, respectively, to 59.2 and 60.6 days. U.S. crude oil and other liquids days of supply fell from 12 days higher than the five-year average to 3.6 days lower. OECD crude oil and other liquids days of supply dropped from 7.4 days higher than the five-year average to 1.6 days lower (Figure 4).
EIA forecasts that the tightening trend in global petroleum markets will reverse. In the May 2018 Short-Term Energy Outlook, EIA forecasts that both U.S. and OECD petroleum and other liquids inventories will return to surpluses compared with their five-year averages, although on a smaller scale compared with the period between 2015 and 2016. U.S. and OECD days of supply are forecast to remain in a band that is close to the five-year average level through 2019. However, additional uncertainty about future global oil market balances remains in light of, among other factors, the U.S. withdrawal from the Joint Comprehensive Plan of Action (JCPOA) and the continued instability in Venezuela.
U.S. average diesel price increases
The U.S. average regular gasoline retail price for May 14, 2018 was $2.87 per gallon. Please note that on May 14, 2018, EIA implemented new statistical methodologies for conducting the Motor Gasoline Price Survey. Because of these changes, the published price estimates this week are not directly comparable with those published for May 7, 2018, which were based on EIA’s previous sample.
The U.S. average diesel fuel price increased nearly 7 cents to $3.24 per gallon on May 14, 2018, nearly 70 cents higher than a year ago. Midwest prices rose over eight cents to almost $3.18 per gallon, West Coast and Rocky Mountain prices each rose nearly seven cents to $3.73 per gallon and $3.32 per gallon, respectively, and East Coast and Gulf Coast prices each rose nearly six cents to $3.24 per gallon and $3.01 per gallon, respectively.
Propane/propylene inventories rise
U.S. propane/propylene stocks increased by 1.7 million barrels last week to 40.4 million barrels as of May 11, 2018, 12.3 million barrels (23.4%) lower than the five-year average inventory level for this same time of year. Midwest, East Coast, and Gulf Coast inventories increased by 0.8 million barrels, 0.6 million barrels, and 0.4 million barrels, respectively, while Rocky Mountain/West Coast inventories decreased by 0.1 million barrels. Propylene non-fuel-use inventories represented 7.2% of total propane/propylene inventories.
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Already, lubricant players have established their footholds here in Bangladesh, with international brands.
However, the situation is being tough as too many brands entered in this market. So, it is clear, the lubricants brands are struggling to sustain their market shares.
For this reason, we recommend an impression of “Lubricants shelf” to evaluate your brand visibility, which can a key indicator of the market shares of the existing brands.
Every retailer shop has different display shelves and the sellers place different product cans for the end-users. By nature, the sellers have the sole control of those shelves for the preferred product cans.The idea of “Lubricants shelf” may give the marketer an impression, how to penetrate in this competitive market.
The well-known lubricants brands automatically seized the product shelves because of the user demand. But for the struggling brands, this idea can be a key identifier of the business strategy to take over other brands.
The key objective of this impression of “Lubricants shelf” is to create an overview of your brand positioning in this competitive market.
A discussion on Lubricants Shelves; from the evaluation perspective, a discussion ground has been created to solely represent this trade, as well as its other stakeholders.Why “Lubricants shelf” is key to monitor engine oil market?
The lubricants shelves of the overall market have already placed more than 100 brands altogether and the number of brands is increasing day by day.
And the situation is being worsened while so many by name products are taking the different shelves of different clusters. This market has become more overstated in terms of brand names and local products.
You may argue with us; lubricants shelves have no more space to place your new brands. You might get surprised by hearing such a statement. For your information, it’s not a surprising one.
Regularly, lubricants retailers have to welcome the representatives of newly entered brands.
And, business Insiders has depicted this lubricants market as a silent trade with a lot of floating traders.
On an assumption, the annual domestic demand for lubricants oils is around 100 million litres, whereas base oil demand around 140 million litres.
However, the lack of market monitoring and the least reporting makes the lubricants trade unnoticeable to the public.
Headline crude prices for the week beginning 11 February 2019 – Brent: US$61/b; WTI: US$52/b
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