Edmonton propane prices in negative territory

OREANDA-NEWS. May 20, 2015. The spot propane price in Edmonton, Alberta, fell to a record low of -0.125?/USG to 4.875?/USG today, as the product's basis price at Conway, Kansas, extended losses.

Edmonton propane is discussed at a price differential from the midcontinent NGL hub at Conway, Kansas, and has been been quoted at a 35-40?/USG discount to Conway propane. Conway propane has also weakened steadily for the last 12 weeks as the market transitions to the off-season.

Today Conway propane dropped to a low of 39?/USG in brisk morning trade, before recovering to 40.5?/USG before noon. This set Conway propane's high/low mean at 39.875?/USG, pushing Edmonton propane to its -0.125?/USG to 4.875?/USG notional range.

No spot transactions have been reported at this record low price, amid thin liquidity in Edmonton since the end of the winter heating season.

Market participants anticipated a negative price, explaining to Argus that marketers can recoup the loss by viewing propane as a portion of a greater NGL barrel.

Participants have expressed uncertainty regarding the mechanics of a negatively priced spot market. The lack of unified sentiment is an indication that the market is entering new territory.

The Canadian National Energy Board (NEB) released its monthly report showing seasonally record high western Canadian inventories at 4.36mn bl going into May. In a follow up notice published today, the NEB stopped short of predicting the price's directionality, but it did estimate that western Canadian propane inventories could reach the region's storage limit of 9.4mn by fall, if current injection levels persist.

Canadian-wide propane inventories grew by 530,114 bl in April to 7.025mn bl, according to the NEB.