Propane swaps basis CIF Northwest Europe have moved to new highs, Platts data shows, as surging crude and tighter availability of North Sea product in Europe has boosted prices.
Early numbers heard from the market on Monday had the front-month propane swap up to $1,088/mt, despite a slide in the front-month ICE Brent futures contract, building on all-time highs seen late last week.
On Friday, the last published March 2012 propane swap hit $1,070/mt, up $36/mt from Thursday's close.
This is the highest front-month propane swap in the history of the quote, which Platts has published since April 2, 2001. The previous high was set July 11, 2008, at $1,012/mt, when the front-month ICE Brent contract was trading at a record-high $145.64/b.
According to industry sources, support for the recent swap levels was due to several different factors.
The recent spell of very cold weather had lead to an increase in requirements for North Sea propane cargoes to cover the surge in inland demand.
There has also been a steady stream of exports from The North Sea to the Mediterranean area and the current strength of the Far East market could also lead in more North Sea cargoes moving out of the area.
Together, both factors have taxed physical product availability, traders said.
"I do not see any [North Sea] availability until mid-March," a North Sea propane trader said, adding that the tightness in the market was contributing to strong physical and swap values.
On Friday, physical CIF NWE propane cargoes were assessed at $1092.50/mt, up $30/mt from Thursday's values. Since January 3, physical propane cargoes have gained $242/mt.
