NGL Prices - Dec 29

[dan_s]

TPH: Propane pricing surges to near multi-year highs as winter weather grips NE, Mont Belvieu exports strengthen (MB $0.98/gal) –

Propane prices rise as onset of winter weather demand and strengthening Mont Belvieu exports drive product pricing to near 3-year highs. Total U.S. propane stocks have fallen below 5-year averages as continued Mont Belvieu LPG export build out draws on PADD 3 inventories. Global prices should continue to support export growth even as MB pricing approaches $0.98/gal on strengthening weather-induced U.S. demand.

Expect robust inventory draws into the new year as winter weather persists and shippers take advantage of implied 7c/gal spot arb (MB $0.98/gal vs. Far East $1.18/gal).

E&P’s best positioned to benefit from improved C3 pricing include NGL-levered names DVN, AR, and RRC. Midstream operators EPD and TRGP retain direct price exposure via commodity-levered processing agreements and excess export capacity. On the chems side, higher propane prices create mild headwinds for LYB and EMN.
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Sanchez Energy (SN) and SM Energy (SM) are two small-caps that should get a big revenue boost from increasing NGL prices. - Dan