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PIRA: Weekly oil market recap for the week ending 14 September

Hydrocarbon Engineering,

PIRA Energy Group has released its weekly oil market update for the week ending 14 September, which revealed the following:

US commercial stocks set new record high

Total US commercial stocks built to a new weekly record the week ending 4 September. However, with a much larger overall build last year, the y/y excess narrowed.

Total petroleum demand growth rates remained strong, with declining gasoline growth offset by increased distillate growth.

North America natural gas market

The hot weather initially expected through the first week of September had a big effect. The week-in-progress (14 September – 18 September) will have the highest CDD accumulation since records dating back to 1950. Electric generation burned in excess of 32 billion ft3/d for the reference week and the week-in-progress tied to hot weather.

After being stable for over a month, US ethanol prices were higher the week ending 4 September. Manufacturing economics also improved, boosted by increased corn costs.

US ethanol output increased to 958 million bpd from 948 million bpd as more plants completed their summer turnarounds. Ethanol inventories were drawn by 360 000 bbls to 18.6 million bbls, which was 621 000 higher y/y.

US LPG prices strengthen with seasonal demand

Strength in U.S. LPG prices is persistent. As the off-season inventory building season comes to an end with doomsday scenarios of soaring inventories never materializing, prices are recovering ground lost due to these fears. Propane and butane at Mt Belvieu outperformed broader energy markets by logging gains of 2% to US$0.448 and US$0.576/gal, respectively. Ethane gained 1% in line with natural gas prices to maintain a US$0.13/million Btu premium above Henry Hub prices.

Russian natural gas prices

Russian gas prices are an excellent value right now relative to competitors and it is an enticing ‘buy low’ moment for its customers.

US NGL production

US NGL production inched higher in June compared to prior month. Strong NGL production implies that field producers are still focused on wet gas production. The small observed increase in total NGL production would have been significantly greater with deep cut ethane and propane recovery. As robust as the latest data are, y/y NGL production growth declined.

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