Mid-Month to Mid-Month: Again, Propane Prices Seek Solid Footing

(March 12, 2020) — As the scourge of the novel coronavirus (COVID-19) strikes more countries and regions of the globe daily, economic stability is on precarious footing as witnessed by the recent volatility of the stock markets worldwide. In addition, the outcome of the March 6 OPEC meeting, according to the U.S. Energy Information Administration (EIA), added more concern as the agency now forecasts that OPEC will target market share instead of a balanced global oil market. It believes OPEC crude oil production will increase to an average of 29.1 MMbbld in the second and third quarters of this year. In light of this, the agency revised its global demand growth for 2019 to 2020 from its previous forecast of 1.0 MMbbld in February down to 0.4 MMbbld currently. The revised March estimate is driven by EIA’s expectations of slowing economic growth, primarily related to the effects of the coronavirus outbreak.

The Mont Belvieu posted average opened the mid-month period at 49.840 cents/gal., 4.833 cents below a month earlier and a strong 27.583 cents under last year. Prices then climbed a bit more than 4 cents week to week to stand at 54.007 cents, but cut that gain in half to end February at 52.007 cents. With the beginning of March, prices continued their downward trend with the average losing three-quarters of a cent taking them to 51.257 cents. This week prices have plunged nearly 8 cents to 43.340 cents/gal.

Conway, Kan. posted prices mid-February were holding at 41.348 cents/gal., nearly 5.5 cents behind the previous month and trailing last year by 21 cents. A week later the average added a nickel to rise to 46.772 cents, the highest point of the period. At month’s end the price lost 2 cents to leave February at 44.772 cents. The new month saw another slight decline of 0.726 cents to bring the average to 44.046 cents, and this week saw a steep drop of close to 8 cents to 36.222 cents.

Mont Belvieu spot propane started off at 38.375-39.00 cents/gal., 1.5 cents lower than the prior month and off from last year by a whopping 26.625 cents. As February progressed, trading gained 5.625 cents to 44.00-44.875 cents, but closed the month by wiping out the prior week’s gain, taking it to 38.75-40.00 cents. March strengthened ever so slightly to 39.625-40.375 cents. This week trading dropped 5.125 cents to 34.50-35.25 cents.

Conway spots opened the new month at 35.75-36.25 cents, off by 2.25 cents month over month and 20 cents below a year earlier. Offers rose 6.375 cents the following week to 42.125-42.75 cents, but February ended with another loss to take spots to 37.00-38.00 cents. March saw prices sag 0.75 cents to 36.25-36.75 cents, and this week they fell another 7.75 cents to 28.50-29.375 cents.

(SOURCE: The Weekly Propane Newsletter, March 12, 2020. Available by subscription)