The demand drivers from Chinese consumption and a recovering US have been complimented by consistency in output from major producers and refiners without any price altering outages or strikes.
We continue to await the impact of an incoming wave of supply through various expansion and greenfield projects that is expected to lead to more pronounced price suppression and, as suggested by Figure 2 within the Commodity Bulletin, highlights the supply side excess impacting the market balance in 2014 and beyond. With increasing confidence of sustained Chinese demand, whether we see this price suppression may be more of a function of what upsets the supply side apple cart. Labor tensions, production outages and environmental factors – and particularly a combination of all 3 at different major producers – all have the opportunity to change the market balance at short notice. Producers will all be hoping it is not their operations that change the supply side dynamics.