Oil futures trades on Japan's TOCOM rise 3.3% on month in August

Russia's Federal Antimonopoly Service (FAS) is studying the recent surge in LPG prices on the domestic market, an official said at a Moscow industry conference Friday organized by Commodity Market Analytics Consultancy (ATR).

"We are analyzing the situation," Alexandr Golub from FAS said.

LPG prices in Russia rose more than Rb4,000/mt ($61.50/mt) over the past two months.

Market traders cited various reasons, including maintenance at Lukoil's Lokosovsky gas processing plant, which is due for restart in the fourth quarter, but also overall reduced supply due to run cuts at Russian refineries.

The supply crunch appears to have also dented Russian exports.

Northwest European LPG traders reported increased buying from ARA and Germany into Poland and Ukraine due to the lower Russian flows.

Russia produces around 15 million mt LPG annually of which 43% is exported, primarily to Poland and Ukraine. Some 22% is used as motor fuel, 25% in the petrochemical industry and 7.5% by households, according to data presented at the Moscow ATR conference.

Apart from the usual supply and demand, domestic prices are also influenced by export netbacks, Anna Bondarenko from Gazprom Gazenergoset told the conference.

But the LPG market is increasingly looking at the LPG prices formed on the exchange floor as an indicator, she added.

Late in 2014, Russia set out the conditions for the trading of LPG used as autogas and by households on exchanges, requiring 5% of the monthly volumes as the minimum amount to be sold on exchanges.

At present, the 5% mark has not been reached, although the past year had marked "a substantial increase" in the traded volumes, Alexei Rybnikov, president of the St. Petersburg International Mercantile Exchange (SPIMEX) told the conference.

All the main LPG producers apart from Sibur are trading on the exchange floor, but "we are looking forward to see Sibur" in order to develop a representative indication, Rybnikov said.