The bulls are out and the bears are nowhere to be found. As a trading and marketing group, we are bullish. I’ve been sharing the signs with you and we just see more reinforcement each day. Today, we’re seeing November buyers willing to sell February for over three cents less. That’s a huge bullish sign and also points to some potential wet barrel problems in the fourth quarter, unless things change. Wet barrel problems may lead to significant short-term price spikes…and short term is a moving target; days, weeks or a month; nobody knows.
Tomorrow is Wednesday, inventory report day. Last Wednesday saw the nickel-plus price spike, one of the bigger one day jumps in a while. If tomorrow’s report is seen as bullish, there’s no reason to believe we won’t see another boost in prices. Crude is off slightly in midday trading ahead of an expected 1.5MM draw. Propane is now trading at 41% that of crude at Mt Belvieu, continuing to creep higher towards its more historically aligned ratio.
For those of you in the Midwest, barrels are flowing from Conway to Belvieu in a big, big way and that is only going to get worse as more pipelines coming board between the two locations. For those of you on the Dixie, the spread between Belvieu and Hattiesburg could get interesting in a wet barrel situation.
If you are covered for the outmonths or mostly covered, congrats! If you still have a good deal of buying to do….cost averaging is the word of the day.