Geopolitical Strife Pushes Prices Up

News
In mid-October, oil prices were on course for the biggest weekly gain in six years as rising geopolitical tensions and signs of slowing output were bringing buyers back. Brent, the international crude benchmark, rallied by 12% to hit $54 (U.S.) per barrel, the highest since late August. U.S. benchmark West Texas Intermediate also surged, having gained 12.2% and moving above $50 per barrel for the first time since July. (However, as the month progressed prices nosedived, with Brent falling below $50/bbl and WTI moving down to the $46/bbl range and lower.)

Russia’s military intervention in the Syria conflict has added an uncertain dimension to tensions in the Middle East. Iran, an OPEC member, is Moscow’s ally in the conflict. As crude oil prices have climbed into the low $50 per barrel area, this appears to be the main factor causing LPG prices to rise.

The large propane and butane markets have started to become busier with the expected arrival of cold weather, although butane is expected to be tight until the end of this month. Large propane prices are now at $347 per tonne cif
Northwest Europe, having increased by $50 per tonne since last month. Large butane prices are at $378 per tonne cif Northwest Europe, having hardened by $64 per tonne since the end of September. The propane and butane coaster markets have remained very quiet, but there is still considerable demand for butane from petrochemical and blending companies. The latest indications of propane swap deals are November $359-$363 per tonne and December $356-$360 per tonne, both cif Northwest Europe. North Sea prices for October are $306 per tonne fob North Sea terminals for propane and $426 per tonne for butane. Both products have strengthened over the past month, with propane adding $66 per tonne and butane $74 per tonne.

In the Mediterranean, the large propane and butane markets have been very quiet. Limited cargoes have been received from the United States and the West Coast of Africa. Prices for large, fully refrigerated cargoes of propane are
$427 per tonne cif Lavera, south of France, and $450 per tonne for butane. Since the beginning of the month, propane has increased by $50 per tonne and butane by $15 per tonne.

The coaster markets have experienced some congestion at Bethouia, causing delays on some propane cif deliveries in Italy, and alternative sources are not able to supply this lack of product in time. Sonatrach, the Algerian national oil company, has set new contract prices for October at $310 per tonne fob Bethouia and Skikda for propane and $375 per tonne fob Bethouia for butane. Since early in the month, propane has hardened by $45 per tonne and butane by $90 per tonne. The Saudi Arabians posted new contract prices for October at $360 per tonne fob Middle Eastern (M.E.) terminals for propane and $365 per tonne fob M.E. terminals for butane. Both products have increased in price, with propane $45 per tonne higher and butane up $20 per tonne.

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