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THIS WEEK'S TOPIC:
PROPANE PRICES
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Price spread between Mont Belvieu, Conway balloons
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The price spread between Mont Belvieu and Conway propane has increased significantly this month. However, as the impacts of winter demand wane this time of year, it is not unusual to see Conway prices move toward the weak side.
Click to enlarge.
Early February has run some of the highest spreads over the last three years. Last week, the spread ballooned to 21.25 cents. Over the last three years, the average spread during February has been 5.2 cents.
The spread did go up to 12.75 cents in mid-February last year, but it had fallen to 7.5 cents by the end of the month. This year, the spread was expanding toward the end of February. Obviously, something unusual is happening for the spread to be about four times the three-year average.
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It is not clear why such weakness has developed in Conway, though rumor has it there is a large player closing those Conway price positions, causing downward price pressure. That theory is backed somewhat by the fact that the spread between March Mont Belvieu and Conway is around 8 cents.
If a retailer buys supply based on Conway prices believing this pressure is an anomaly, it might be beneficial to get quotes for future price protection. The weakness in Conway pricing may carry through to March and beyond. However, the current pullback appears to be giving a good opportunity to get that first piece of price protection for next year.
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WHAT IS COST MANAGEMENT SOLUTIONS?
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The Propane Price Insider is an email service that provides:
- Three daily price Flash Wires
- Periodic option quotes
- Wednesday inventory data updates around 11 a.m. ET
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Evening report with executive summary, weather maps and complete review of energy prices that are based on propane's Btu equivalent
For a free 10-day trial subscription by email, sign up online here or call 888-441-3338.
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Cost Management Solutions LLC (CMS) is a firm dedicated to the analysis of the energy markets for the propane marketplace. Since we are not a supplier of propane, you can be assured our focus is to provide an unbiased analysis.
Contact us today to see if you can benefit from having the Energy Price Watchdog working for you.
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Many retailers simply don't have time to analyze the large amounts of data to make an informed purchasing decision.
We offer:
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Detailed market recommendations on hedge and pre-buy entry points
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Prompt market execution of hedging strategies
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Supply cost analysis and recommendation as to effective hedging strategies
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Large volume consideration when we place your hedges
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GOT STORY IDEAS? Email Brian Richesson, Editor in Chief
LOOKING FOR ADVERTISING OPPORTUNITIES? Email Brian Kanaba, Publisher
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