Propane prices have fallen to an 11-month low this week, reacting to heavy losses in ICE Brent crude and arbitrage inflows from the Middle East, sources said Friday.
The price of delivered propane cargoes in the North Sea were assessed down $35/mt at the close Thursday at $772.50/mt, marking an 11-month low after being assessed at $772.50/mt on October 22.
Since the last spike in prices on September 15, when cargoes were valued at $862.50/mt, the down slide represents a $90/mt or 10% fall.
Global energy prices are currently under mounting pressure resulting from the recessionary fears spreading through global financial markets.
ICE Brent futures followed the equity selloff, suffering a significant daily loss of $5.71/barrel on Thursday to be valued at the close at $106.28/b, according to Platts data.
With North Sea propane swaps also carrying a wide contango--the spread between October and November was assessed on the close at minus $37/mt Thursday -- the prompt physical market is under pressure against prices further out.
Combined with a number of cargoes from Saudi Arabia scheduled to discharge in Europe shortly, storage terminals are full and petrochemicals end-users are struggling to absorb the surplus.
"Propane is flooding the market, petrochemicals are cracking what they can but product is still coming in the on belief that Europe can absorb it," a trader said.
