US Gulf Coast propane topped $1/gal Friday for the first time in three years, tracking crude futures higher and continuing its upward bent following a bullish inventory report earlier in the week.
November LST propane rose 1.125 cents to $1.0075/gal, the highest assessment since October 8, 2014, when the front-month was assessed at $1.034/gal.
Nearby non-LST propane rose 1.5 cents to 99.875 cents/gal, but weakened 1 percentage point to 74% of the value of front-month WTI futures, which spiked $1.41/b compared with Thursday's settle at $56.55/b.
Three years ago, crude futures were trading around $75/b, meaning propane prices are stronger today. In October 2014, propane averaged 47% of the value of crude, compared with 76% last month.
FOB Houston propane cargoes remained at 5 cents/gal above Mont Belvieu cavern product despite rising prices at the US NGL hub following Wednesday's inventory report. The weekly US Energy Information Administration report showed a 2.5 million-barrel draw in the week that ended November 10 due to Midwest demand.
"Values have just crumbled," a broker said of cargo netbacks. "The [FOB Houston cargo] bid and ask are just too far apart now, so it's a stalemate." The last known trade was a first half of December deal at 5 cents/gal, he added.
However, the narrower netback to Asia has yet to result in cargo cancellations.
"All December liftings are already programmed pretty much, meaning ships are coming to lift," a trader said.
Propane stocks dropped to 74.68 million barrels in the 45th week of 2017, or 26 million barrels below year-ago levels and 11% below the five-year average, EIA data show.
Elsewhere in NGLs, butane rose 87.5 points to $1.06/gal, or 79% of the value of crude futures, compared with an average 67% of crude futures in November 2016.
More split LPG cargoes have been loading from the Gulf Coast recently, sources say, though it is unclear how many.
US butane exports have climbed from an average of 3.2 million barrels per month from January through August 2016 to 3.97 million barrels per month through August 2017, the latest data available from the EIA show.
Natural gasoline rose 1.75 cents to $1.365/gal based on four trades in the Platts Market on Close assessment process.
Ethane was unchanged at 26.125 cents/gal, despite a 4.4-cent increase for front-month NYMEX natural gas futures. Ethane's premium over gas futures fell 5 cents to 82 cents/MMBtu.
