The API’s came out last night and showed a 9mm draw down in Crude Oil, while a 2.5mm draw was expected. This is on top of last week’s over 10mm draw. I guess I am a little confused on whey they are still expecting lower draw numbers after such large actual consumption totals have been the norm the past few weeks, but that is a story for another day.
Regardless, early hours crude trading shows the liquid up $1.70 at $105.23 as of 7:21am central time. The DOE’s will come out later today and even if propane is showing build numbers, crude oil is likely going to keep dragging propane along for the ride. It’s looking more and more like the dip we saw two weeks ago, when outmonth contract pricing for September through December was $.8350 at Conway. Last night before the traders went home, we were at $.9050 for that same time frame and once everyone gets into the office today, my guess is that number is going to start out closer to $.9100, if not higher than that. We are getting back to the levels where many of you own a good chunk of your gas.
The geopolitical unrest in Egypt is still in play, there are bullish fundamentals in crude, hurricane season is upon us which keeps some focus on gulf supply disruption possibilities, etc.
Yes, this is the time of year we build propane inventories. This is the time of year when buying opportunities have existed more often than not…but I don’t think it would be a stretch to suggest we may have hit the low in the market, given the psychological ride/connection we are now taking with crude oil.