I came across an interesting article today that talks about the current propane to crude ratio as well as explaining the recent history of that ratio and how things have changed a bit. You can read it at this link. Some of it gets pretty heady, but the gist of it is best encapsulated in the last paragraph:
“With the recent narrowing of the Brent versus WTI differential, the spread between crude price markers that had made NGL prices look stronger evaporated, with the result that NGL prices look weaker relative to WTI crude oil. Said another way, as WTI increased relative to Gulf Coast crude imports priced in reference to Brent, the relationship of NGLs relative to WTI narrowed. But that is only part of the story. At this moment in time, NGL prices are cheap. And today that is true regardless of which crude marker you use to make the comparison.
The author has spent a great deal of time in the industry. That said, nobody can predict the future but there is certainly some support out there for the propane prices being where they are. Then again, some of you are not big believers that crude oil should be at the level it is right now.
Many of you own gas where prices are right now and I remain convinced you won’t be unhappy with it in the winter. I think many of you would be surprised at how few people loaded up on the lows we saw two and a half weeks ago. Some layered in more gas at those levels, but the markets were dropping every day and many wanted to stay out of the way and let it keep falling. Then the market bounced up a few cents and the mentality was that things would fall back down…they never did. Now, we’re a dime higher.