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DIGITAL EDITION
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This e-newsletter will now be sent from lpgas@ncm-insights.com. Please add us to your email contacts or ask your IT department to whitelist us.
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THIS WEEK'S TOPIC:
PROPANE PRICES
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Falling crude, sluggish fundamentals sink prices |
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May was a bearish month for propane. Falling crude and sluggish fundamentals combined to send propane prices down to multi-year lows.
Mont Belvieu LST opened the month with a daily average of 62 cents. By May 31, the daily average was 49.75 cents, down 12.25 cents, or 19.76 percent, over the course of the month.
Click to enlarge. Image: Cost Management Solutions
Conway opened the month with a daily average of 54.1875 cents and closed with a daily average of 47.625 cents. The drop was 6.5625 cents, or 12.11 percent.
Click to enlarge. Image: Cost Management Solutions
Mont Belvieu LST posted a monthly average of 57.6875 cents and had an average value of 39.79 percent of WTI crude. In April, the monthly average was 64.2024 cents, 42.22 percent of WTI.
Conway’s monthly average was 51.6307 cents with a 35.64 percent relative value to WTI crude. In April, the monthly average was 55.7560 cents, and the relative value to WTI averaged 36.67 percent.
For the month, WTI crude traded at an average of $60.8650 per barrel, compared to $63.8710 per barrel in April.
It looks like the weakness in May has opened the door to an upswing in June. Propane prices finally reached a point this past week where retailers were willing to step in to cover winter barrels as they saw the downside risk manageable at current prices.
Crude also made a 22 percent downward correction from April 23 to June 5. Traders are looking for reasons to buy crude. Investors started moving back into riskier assets such as equities and commodities last week, after the Federal Reserve signaled it would be willing to lower interest rates this year, essentially putting up a backstop for the market. The Organization of the Petroleum Exporting Countries is also signaling that it will likely keep production quotas in place past their current expiration on June 30.
These could be enough reasons to have crude rally and pull propane prices higher. The oversupply situation in propane remains and is likely to be around for a while, but it looks like we could be in for a firmer market, at least in the short term.
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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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