Yesterday in this space, I wrote the following:
” Propane values at Conway and MTB ended January about a nickel lower than their in-month high point. Last week’s 3.6M/bbl draw seemed to inject a little bit of life into propane values, but one wonders if there weren’t some month-end wet barrel delivery aspects involved in the strength in propane prices, because the overall fundamental picture for propane is still quite bearish on its own.”
Yesterday was the first trading day for the month of February, and propane values had their largest one-day tumble in months.
Conway dropped $.044475 compared to last Friday’s daily average, while MTB/TET dropped nearly a nickel. Prices have stabilized today, with the averages looking to close near where they did yesterday.
You can also see in the image on the right, from above, that propane lost a good deal of ground to crude oil yesterday, too. Crude was off $1.45/bbl Friday to Monday, but propane’s losses were greater, shedding nearly 3% of its value compared to WTI crude oil.
This ‘feels’ about right, relative to where propane’s values should have been trading relative to crude, for the times we are in….and it appears that last week’s ‘strength’ in propane compared to crude was mostly due to end of month trading positioning, as hypothesized.
Also discussed yesterday were the potential Coronavirus impacts on crude oil demand. John Kemp of Reuters wrote more on that topic today, linked here . There is some fascinating pandemic history in that item, as Kemp is a bit of a history nut in addition to being an energy analyst. Honestly, the entire article is a great education on the impacts of viruses and the periods they go through, and how this one could impact our industry via the impacts to global demand destruction…or rather, the possibilities of such impacts.