US Gulf Coast normal butane spot values for December surged 21.70 cents to be assessed at $2.2135/gal at Mont Belvieu, Texas, in a rise attributed by market sources to tight supply.
The previous high, $2.2575/gal, was reached on July 21, 2008, in the midst of the record high run-up in crude oil prices.
"Somebody is short for year-end ad valorem inventories we suspect," an international LPG broker said, referring to tax considerations.
Demand for butane generally rises in the wintertime as refiners and gasoline producers seek to heighten RVP specifications in the motor gasoline pool.
But this run-up in the butane market has caught several entities off guard and is unusual, sources said, given that its value is less than a quarter-cent away from the next heaviest NGL, natural gasoline, which was assessed at $2.2150/gal for December non-Targa.
"Normal butane has historically broke more companies than any other LPG ... [it is] generally shorts of normal butane -- not length -- that puts 'for lease' signs in front of offices," a Gulf Coast NGL broker quipped.
In related market activity, Gulf Coast isobutane for December spot values also spiked 21.7 cents, reaching an all-time high at $2.6435/gal and maintaining a 43-cent premium over normal butane.
