Bearish factors undermine propane’s value
April 10, 2018 By Mark Rachal and Dale Delay
Propane’s relative value to West Texas Intermediate crude is already slightly below the low end of the range we expected for this summer.
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Propane’s relative value to West Texas Intermediate crude is already slightly below the low end of the range we expected for this summer.
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Change has been in the works for several years now as the U.S. propane market has become a net exporter of propane.
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Last week, the U.S. Energy Information Administration reported U.S. propane inventory had fallen to 36.759 million barrels for the week ending March 16.
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As the U.S. propane market continues to link up with international markets, changes are taking place on the supply horizon.
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Any forecast on propane prices begins with trying to determine where crude will be priced.
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As the impacts of winter demand wane this time of year, it is not unusual to see Conway prices move toward the weak side.
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There have been two primary factors behind the late-winter weakness in propane prices: rising propane production and lower propane exports.
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Cost Management Solutions’ Mark Rachal takes a look at propane’s relative value to crude and how it is trending compared with last year.
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It is now the homestretch for winter, but forecasts for a cold February mean there is much work still to be done.
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U.S. propane prices have returned to where they began the winter – in a price decline that has surprised many, given strong domestic demand support.
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