The time when there is total displacement of light crude oil imports into US Gulf
Coast refineries is now very close. The substitutability of other imports is more
limited, inducing a period of unrestrained direct competition between
incremental domestic supplies and a remapping of price relationships.
• We are leaving all our Brent price forecasts unchanged. However, our WTI
forecasts are being changed, with WTI’s long-run steady state discount to Brent
put at $15 per barrel, and the average 2013 discount put at $17 per barrel.
• US inventory movements are following seasonal norms fairly closely, although
the deficit of oil product inventories to their five-year average has increased
slightly. The readings for US distillate demand are stronger, while gasoline
demand has yet to follow through on the solid y/y growth in January.