Sellers flood Mont Belvieu propane markets

OREANDA-NEWS. June 10, 2015. Mont Belvieu, Texas, propane prices have tumbled to fresh lows, surpassing last week's 13-year floor and subsequently pulling propane's value relative to WTI along for the ride.

LST propane kicked off the session valued at 32?/USG and fell to a morning low of 30?/USG, values not seen at LST since 6 February 2002. The market later regained strength in the session, firming to 34?/USG.

EPC propane opened the session sold at 29.75?/USG, also a value unseen since February of 2002, and rose to 32?/USG in thin intraday trade.

Meanwhile, LST propane averaged about 24.54pc of WTI, and reached an intraday low value of about 22pc of the crude benchmark.

EPC propane averaged a weaker 22.09pc of WTI.

Mont Belvieu propane sellers have flooded the marketplace since last week's propane inventory report, which reported a larger than expected 2.383mn bl build in stockpiles along the US Gulf coast, which has subsequently weakened spot prices.

At 50.195mn bl, PADD III propane inventories are at the highest level seen since the US Energy Information Administration (EIA) began recording storage levels.

Gulf coast NGL storage has become of concern on the oversupplied propane market and recently the EPC terminal has been heard facing some storage constraints, resulting in the LST market seeing robust trading volumes.

Today, more than 500,000 bl transacted at the LST terminal, adding to the 2.094mn bl that traded last week. The EPC terminal saw about 90,000 bl transact today and 885,000 bl traded last week.

Since the recent drop in propane prices, the outer-month markets have seen robust trade and the contango has widened.

At the LST terminal today, June/July spreads traded between a 4.5-4.625?/USG contango, compared to Friday's differential of 3.625?/USG. Market observers have noted that June/December has been talked at a 17?/USG contango.

The decline seen in the propane market has also resulted in weaknesses in the butane spot market. EPC butane fell to an intraday low of 48.25?/USG today, and hit an intraday low of 46.25?/USG on 28 May, a value unseen since July of 2002.

EPC butane averaged about 35.36pc of WTI today, and has been steadily declining since last week. At the start of last week's trading session, butane stood at 41.33pc of WTI.