The report of Morgan Stanley on Commodities and, especially, oil, indicates that the race for structures in Northern Europe does not imply an imminent price recovery. The structures related to the production of Brent in the North Sea they are in fact stepping up their maintenance, while there will be only a modest turnover of refineries in North-Western Europe.
The main period for maintenance is between June and August, which will limit the available cargo. The maintenance of the refineries in the area, according to the report, was more extensive than in the previous year, and arrived earlier.
However, this factor does not necessarily imply a possibility of an increase for the imposed price or a clue to faster recovery in global imbalance. More likely it shows that oil dynamics are much more regionalized than markets tend to appreciate, even for a global benchmark like Brent. Pricing is still driven primarily by global dynamics.
Another of the market risks is too excited a reaction to the anticipated extraction of crude oil United States. Last week's drawing, ahead of usual schedules, does not kick off the drawing season and has no long-term significance, even though PADD 3 flows hit record highs for this period of the year.
The risk, then, is that the market cannot bear these flows from the United States. Product trends are particularly worrying for gasoline, and record extractions for the United States risk being unsustainable: without exports, local demand may not be enough, even for the strong US gasoline market. Gasoline stocks in Asia and Europe are worrying for US exports.
