PIRA Issues Weekly Energy Recap

A weekly Energy Market Recap by NYC-based PIRA Energy Group reports that Asian oil balances will for now remain long, with the U.S., product stock build outpacing crude draw, thus widening commercial stock excess; and Japan’s both crude and finished product stocks rising.

Oil prices in Asia are likely to remain soft. Asian oil demand will pick up in 4Q and support a rising run profile post-turnaround. The continued glut of Atlantic Basin crude will need to be moved to Asia which will keep Brent-Dubai narrow. Asian crude demand will rise and some of the surplus should be drawn, thus presenting a floor to prices, according to PIRA.

Japan’s crude runs fell back slightly and imports rose, thus building crude stocks. Finished product stocks continued rising, though gasoline and gasoil stocks posted a draw.

The U.S. Propane prices climbed an additional 2% this week. U.S. LPG price increases will likely moderate or re-trace as stock building resumes in the coming weeks, and as the spot arbitrage to Europe and Asia remains challenged, if not closed.

Most U.S. ethanol assessments reached seven-month lows September 4 as the DOE reported that stocks built 356 thousand barrels and the production of ethanol-blended gasoline fell 1.1% from the previous week. Corn futures were also the lowest in over four years.