Home' Trinidad and Tobago Guardian : September 5th 2013 Contents BG8 | ENERGY
BUSINESS GUARDIAN www.guardian.co.tt SEPTEMBER 2013 • WEEK ONE
Motor gasoline demand
in the US, a market
that T&T has been
known to emulate, is
falling, according to
numbers from an
August 2013 study.
"Delivery data for May closely tracked
last month s forecast, with an average 18.6
million barrels per day (mb/d) of oil products
delivered in the US50 (50 US states). This
is down 0.8 per cent on the year, broadly
in line with the 12-month average. A contrast
has emerged in recent months between
products that closely track industrial activity,
such as gas, oil and LPG, which have shown
rising demand, and others like fuel oil and
gasoline, demand for which has been erod-
ing," the International Energy Agency said
in its latest oil market report for August
On total oil product demand, the agency
said that based on the latest weekly releases
from the US Energy Information Admin-
istration "we have revised up our forecast
of June demand by 235,000 barrels per day
(kb/d), to 19 mb/d. With a year-on-year
gain now demonstrated in June, this leaves
four of the first six months of 2013 above
their year earlier reading, marking the
strongest sequence in US consumption data
since the first quarter of 2011."
The latest weeklies suggest even stronger
growth in July, but, if experience is any
guide, that could stem at least in part from
an understatement of exports, the IEA said.
From January to May, for example, the dis-
crepancy between the weekly demand num-
bers and the revised monthly data series
varied between -0.7 mb/d and +0.5 mb/d,
the agency said.
"Weekly gasoline demand estimates for
July look particularly robust. Although US
gasoline demand traditionally increases dur-
ing the US driving season the upward swing
reported in the US weekly series exceeds
expectations," the IEA said.
Feeding off the recent data flow, the IEA
has raised its forecast of US oil demand
growth for 2013 as a whole to 0.3 per cent
(0.0 per cent previously). Despite this revi-
sion, which takes stock of the latest uptick
in delivery patterns US demand remains
projected to edge down over the medium
Remarkably, while the US demand outlook
for 2013 looks more upbeat, the International
Monetary Fund in its July World Economic
Outlook (WEO) has reduced its forecast of
US GDP growth for 2014, to 2.7 per cent
from 3.0 per cent in the April WEO, the
It said: "That adjustment, coupled with
our own assessment of relatively high effi-
ciency gains in 2014, bolsters the forecast
of a 0.2 per cent demand decline."
Motor gasoline demand
in the US falling
Uruguay s state oil company Ancap and Argentina s YPF (NYSE:
YPF) signed a natural gas memorandum of understanding stipulating
exports of natural gas from Uruguay s future US$1.3 billion LNG
regasification terminal GNL del Plata.
As part of the deal Uruguay aims to export five million m3/d
of natural gas to Argentina starting in 2015, Uruguay s government
said in a release.
The MOU also stipulates that Argentina and Uruguay may jointly
purchase gas and that Argentina may use GNL del Plata for an
In addition YPF agreed to aid in exploring oil and gas potential
in the north of Uruguay.
The agreement was signed during the inauguration of Uruguay s
expanded La Teja refinery.
In its own press release Uruguay s industry, energy and mining
ministry MIEM called the joint YPF-Ancap refinery expansion "the
most important environmental work in this nation s history."
The expanded facility will improve Uruguay s air quality by
removing 99.5 per cent of sulfur from gasoil and 85 per cent from
gasoline, MIEM added. (Business News Americas)
Argentina, Uruguay ink natural gas deal
A glut of corn has damped interest by biofuel makers
in a US government programme to sell surplus sugar
for ethanol, potentially decreasing its effectiveness in
propping up sugar prices.
With the US harvest of corn, the nation s biggest
crop and the source of most of its ethanol, expected
to set a record this year, ethanol producers don t see
sugar as a competitive substitute, said Todd Becker,
chief executive officer of the Omaha, Nebraska-based
Green Plains Renewable Energy Inc. (GPRE), the fourth-
largest maker of ethanol in the US, which decided not
The price of corn has plunged 43 per cent since
reaching a record US$8.49 a bushel during last year s
US drought. The government said this month that
farmers will boost production by 28 percent to an all-
time high of 13.763 billion bushels. The grain closed on
August 28 at US$4.8075 a bushel in Chicago trading.
"You don t just open a fermentation tank and put
some sugar in there," Becker said today in a telephone
interview. "We re not at US$8 corn anymore. Sugar
isn t a game-changer for anyone in the industry."
Bids to the government were due yesterday for buyers
and sellers of sugar under the program in which the
U.S. Department of Agriculture will match companies
that want to rid themselves of surplus sugar with busi-
nesses interested in acquiring the sweetener to process
The initiative is meant to prop up sugar prices---
depressed by a record surplus---and dispose of supplies
used as collateral for government loans from the Com-
modity Credit Corp, staving off expensive forfeitures
of those loans required under government rules. The
value of outstanding loans using raw sugar as collateral
stood at US$81.53 million earlier last week.
The Feedstock Flexibility Programme, created by
Congress in 2008, has never before been activated. On
August 15, the USDA solicited bids from companies
interested in purchasing sugar to covert into biofuel.
Meanwhile, record domestic sugar output in the cur-
rent season and increased imports, especially from Mex-
ico, pushed US prices to the lowest since 2008 earlier
this year, below the loan-default level, or about 21 cents
Domestic sugar on ICE Futures US in New York
closed on August 28 at 20.95 cents a pound, up 1.6 per
cent to the highest closing price since April 16. World
prices closed at 16.44 cents, down 0.1 per cent. The
US, which for decades has artificially raised market
prices by limiting imports under international agreements,
already is using export credits to reduce the surplus.
Even with limited participation by buyers, the sugar-
for-ethanol initiative still may push prices up enough
to avoid some forfeitures, meeting the government s
goal, Tom Earley, an economist with Agralytica, a food
and agriculture consulting firm in Alexandria, Virginia,
said in a telephone interview.
"What the USDA is doing with the flexibility pro-
gramme is going to have a positive influence on prices
within the next month," Earley said, noting that sale
prices may be below market. "The price that ethanol
producers will have to pay for the sugar may make it
a viable option."
For ethanol producers, the programme will mean
little, said Bob Dinneen, chief executive and president
of the Renewable Fuels Association, an industry trade
group based in Washington.
The USDA is "trying to save the taxpayer money
because they don t have much else they can do," he
said. "This isn t about ethanol. The USDA is awash in
sugar, and they re trying to get rid of it."(Bloomberg)
Cheap corn deters
buyers in US
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