US propane and butane values drop against WTI

OREANDA-NEWS. April 03, 2015. A seasonal demand shift is pulling the values of propane and butane relative to WTI weaker in early April, as the markets transition into softer demand from end-users.

Mont Belvieu, Texas, propane and butane lost strength relative to crude since the start of April. Propane ended March at 45.33pc of WTI and fell to 43.72pc today. Butane's value relative to WTI fell from 55.70pc to 53.67pc.

Propane's value relative to crude has been on the decline the last few sessions as April marks the beginning of warner weather, which leads to seasonal decline in propane spot prices.

Butane prices, similar to propane, declined versus crude as mid-March marked the end of its peak demand season for gasoline blending.

Although butane prices have weakened since the end of the blending season, prices may find strength from an increase in petrochemical demand.

Butane is in the lead for the most competitive petrochemical feedstock, with margins on butane cracking standing at 24.77?/lb, and propane's at 24.31?/lb.

Midcontinent propane values relative to the WTI crude benchmark are softening from peak heating demand season, but the shift lower has yet to bring values weaker than levels seen as recently as early January.

Current propane prices in Conway, Kansas, have actually risen since mid-winter, when the heating fuel was pegged at 41.50?/USG and WTI crude traded stronger at \\$53.27/bl. Conway propane was valued at 32.72pc of WTI on 31 December.

As winter came late this year, midcontinent propane prices did not see a demand-related pop until 26 February, when its percentage relative to WTI hit 49.32pc. Its value averaged 43.95pc throughout the month of March, dropping below 40pc for the first time on 31 March to touch 39.93pc.

The market ended today's session priced at 38.88pc of WTI, sharply below the five-year average of 45.5pc for April.

Butane in the midcontinent has also transitioned lower relative to WTI since the summer began. The blendstock ended March priced at 50.18pc of WTI and sank to 48.62pc on 1 April. Today's session priced the market at 50pc of WTI, down 11.55pt from the five-year average of 61.55pc and off 3.25pt from the average seen in March.