Propane at $55.86/Bbl (5X higher than last year)
Posted: Thu Sep 23, 2021 10:41 am
Propane Weekly from TPH
Historically low storage levels continue to support domestic pricing strength
Sector: Infrastructure | Ticker: MB C3+ | Recommendation: NR | Target: NA | Close: 133c/gal | Analyst: Matt Taylor
Reported DOE data showed a counter-seasonal 0.5mmbbl C3 draw for the week ending September 17th, putting an end to a 5-week streak of builds. The weekly draw was primarily the result of a stark recovery in domestic demand combined with a modest step-down in production offsetting falling export volumes. C3 storage currently sits at 70.3mmbbls, marking the lowest level seen this late into injection season since 2013 as inventories continue to track 28% and 21% below year-ago and 5-yr avg levels, respectively.
Domestic production fell for the third week in a row to 2.16mmbpd and is now moderately lagging both the QTD (-6%) and YTD (-5%) averages. Domestic demand recovered to pre-hurricane levels last week, climbing 46% to just under 1.3mmbpd likely driven by ramping petrochemical demand following the resumption of operations at DOW’s Plaquemine and NOVA’s Geismar ethylene crackers in the prior two weeks. Meanwhile, weekly export volumes also declined for a consecutive week to 1.0mmbpd and are now 15% and 13% below QTD and YTD averages, respectively. Global all-in LPG arbs tracked lower over the past week with Europe now sitting at +4c/gal and Asia at -4c/gal, likely creating headwinds for incremental near-term export cargoes given the heavy linkage to Asian NGL demand. Given the counter-seasonal draw, Mont Belvieu propane pricing relative to Brent strengthened over the past week to the highest level since Apr’20 (74%) as the domestic propane benchmark outpaced crude pricing by 2%.
Historically low storage levels continue to support domestic pricing strength
Sector: Infrastructure | Ticker: MB C3+ | Recommendation: NR | Target: NA | Close: 133c/gal | Analyst: Matt Taylor
Reported DOE data showed a counter-seasonal 0.5mmbbl C3 draw for the week ending September 17th, putting an end to a 5-week streak of builds. The weekly draw was primarily the result of a stark recovery in domestic demand combined with a modest step-down in production offsetting falling export volumes. C3 storage currently sits at 70.3mmbbls, marking the lowest level seen this late into injection season since 2013 as inventories continue to track 28% and 21% below year-ago and 5-yr avg levels, respectively.
Domestic production fell for the third week in a row to 2.16mmbpd and is now moderately lagging both the QTD (-6%) and YTD (-5%) averages. Domestic demand recovered to pre-hurricane levels last week, climbing 46% to just under 1.3mmbpd likely driven by ramping petrochemical demand following the resumption of operations at DOW’s Plaquemine and NOVA’s Geismar ethylene crackers in the prior two weeks. Meanwhile, weekly export volumes also declined for a consecutive week to 1.0mmbpd and are now 15% and 13% below QTD and YTD averages, respectively. Global all-in LPG arbs tracked lower over the past week with Europe now sitting at +4c/gal and Asia at -4c/gal, likely creating headwinds for incremental near-term export cargoes given the heavy linkage to Asian NGL demand. Given the counter-seasonal draw, Mont Belvieu propane pricing relative to Brent strengthened over the past week to the highest level since Apr’20 (74%) as the domestic propane benchmark outpaced crude pricing by 2%.