Good morning. Let’s dive in.
PROPANE PRICING: Yesterday was a stronger day at both Mt Belvieu and Conway, with each hub gaining roughly two cents over the previous in both the front months and out the curve.
4th Quarter 2018 values were in the $.8900 range at MTB and $.7800 at Conway, while 1st Quarter 2019 values were near $.8600 MTB and $.7800 Conway. 4Q2019 MTB values are roughly $.1300 cheaper than the 4Q2018 values, while Conway values are roughly a dime lower than 4Q2018.
Crude oil did bounce back yesterday off of its $.64.73/bbl close on 6/6, which was its lowest close since April 9th.
— Reuters Top News (@Reuters) June 7, 2018
We’ve talked a bit about the seeming ‘cozy’ relationship between the US and the Saudi’s with regards to the Saudi’s picking up the slack after President Trump announced the US would be leaving the Iran Nuclear accord.
However, the revelation that the two nations had talks prior to President Trump’s decision is something new, and frankly, it makes a lot of sense.
The President had already publicly expressed concerns over the price of oil in his unique way (the ‘OPEC is at it again‘ tweet), but in hind sight, it seems like that tweet was all about playing chess, not checkers.
From there, The President has his people reach out to the Saudi’s, he gets assurances that they can meet the market shortfall, and he pulls out of the Iran accord. Oil is shocked for a bit, but very quickly you have the Saudi’s and Russia coming out and calming supply fears, saying they can meet any shortfall…this move, this process, irked other OPEC members. From the linked article:
The sudden shift in Riyadh’s public position came as a surprise to its Gulf allies, who coordinate OPEC policies closely. Some Gulf countries were “upset that there was no prior consultation with them”, a separate source said. They felt Riyadh had come under pressure from Washington and they had not been consulted before public comments by Saudi Energy Minister Khalid al-Falih.
Falih traveled to Russia’s economic forum in St Petersburg last month and said the kingdom was prepared to gradually ease oil output curbs to calm consumers’ worries. The shift has also irked some producers outside the Gulf. “Some people felt they were not properly consulted before the comments in St. Petersburg,” a second OPEC source said.
The Reuters link in that tweet above, and linked again here for ease of access, is truly a fascinating read.
WHIM (Why It Matters): I have written this before, but Saudi Crown Prince Mohammed Bin Salman is his own person…he does things differently. He’s 32 years old and he is wielding his immense power within the Kingdom, he is ushering in some radical (for the Saudi’s) changes and he appears more willing to play ball with The West. That’s not to say that the Saudi’s haven’t played ball with The West before, but they did so more behind closed doors. MBS doesn’t roll that way…and his style and nuances will absolutely have an impact on crude markets going forward, which have an impact on propane markets.
Then you have a comment like this:
Iraqi Oil Minister: Market Is Stable and Prices Are Good, No Need For Production Increase
— LiveSquawk (@LiveSquawk) June 6, 2018
It’s a LOOOONNNG way until June 22nd, when OPEC holds it’s meeting in Vienna.