Weighing the risks associated with locking in propane prices
November 20, 2017 By Mark Rachal and Dale Delay
Relative to West Texas Intermediate’s crude price, Mont Belvieu is valued at 76 percent, while Conway is valued at 73 percent.
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Relative to West Texas Intermediate’s crude price, Mont Belvieu is valued at 76 percent, while Conway is valued at 73 percent.
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U.S. propane supply is growing, but not as much as in past years.
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Recently, propane prices have not gone beyond 78 to 80 percent of West Texas Intermediate (WTI) crude’s price.
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With winter approaching, the most recent data shows petrochemical companies shying away from propane as a feedstock.
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As winter approaches, the Midwest, like the rest of the nation, has propane inventory levels that are below the five-year average and well below last year’s.
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“Trader’s Corner” author Mark Rachal discusses financial hedging and propane retailer education.
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It has been a tough three weeks for propane inventories, as the typical period of inventory build nears its end.
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Propane prices increased after the Energy Information Administration reported U.S. propane inventory fell 1.377 million barrels for the week ending Sept. 15.
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The Organization of the Petroleum Exporting Countries projects demand for its crude will average 32.83 million barrels per day in 2018.
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For the week ending Sept. 1, the U.S. Energy Information Administration (EIA) reported a 6.346-million-barrel build in U.S. propane inventory.
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