The US Gulf Coast ethane January/February spread widened to about 2.25 cents contango Thursday afternoon, puzzling market players unable to find a fundamental reason for such strength in February.
The spread jumped from 1 cent contango early Wednesday to as much as 2.50 cents contango Thursday. By late afternoon, the spread was heard bid 2 cents contango and offered 2.50 cents contango.
It had been 37.5 to 50 points contango in early October.
One source said the widening spread may be "trader-driven."
"It seems more likely than something physical," one trader said.
Others pointed to upcoming steam cracker start ups in early 2018, including CP Chem and ExxonMobil, but those announcements were made prior to Thursday's price movements.
"Exxon's ethane cracker may start up sooner, but CP Chem's likely won't until April/May," the trader said. "Even if so, this Jan/Feb gap makes no sense to me."
Some sources discussed the possibility of an ethane well being taken out of service, but most agreed that would affect the entire curve, not just January/February.
The October/November spread was unchanged on the day with both months at parity.
October non-LST ethane fell 12.5 points to 25.875 cents/gal with November anys flat to October.
Other NGLs also tracked front-month NYMEX WTI lower.
Propane fell 1.375 cents to 89.625 cents/gal, but maintained its value at 73% of crude futures.
Propane's relative value has weakened since early October, which sources have attributed to inventory builds in recent weeks and nearly unchanged stocks levels last week.
Natural gasoline fell 1.25 cents to $1.22/gal based on a trade at that level in the Platts Market on Close assessment process.
