Midmonth to Midmonth: Expect the Unexpected

Heading into the winter heating season, the market has produced some very unexpected pricing swings. As the Saudis decided to set in place a new pricing strategy, coupled with a downturn in the Chinese economy and a reduction in demand, the energy complex was put into turmoil. This resulted in price moves that had not been foreseen.

After tumbling to around 105 cents/gal. in mid-October, the Mont Belvieu posted average shed another nickel to hit 100.906 cents/gal. heading toward the end of the month. At month-end, 2 cents were added before the average backed off below a dollar to 99.719 cents. When mid-November arrived, the price fell to 98.937 cents.

The Conway posted average hovered around 99 cents/gal. in mid-October, but appeared to be testing both ends of the 90-cent range during the month. The following week prices backed off to 92.208 cents only to bump up over a buck at 101.145 cents. The first week of November saw a several cent loss to 99.583 cents, and by mid-November they had dipped to 97.645 cents. While Belvieu held a 6-cent premium to Conway during mid-October, by mid-November that had shrunk to less than 2 cents.

The Mont Belvieu spot market also had a bumpy ride. After reaching the 90-cent/gal. range in mid-October, it lost more than a nickel on both sides, falling to 84.50-85.25 cents. As the month ended, it retrieved the loss, bringing it back to 89.875-90.50 cents. Early November saw it drop to 83.50-84.25 cents, and then shrink to 80.50-81.00 cents/gal.

In the Group, spot propane in mid-October held a fairly wide range at 91.75-94.75 cents, but that was short-lived. The following week spots lost ground, falling to 87.75-89.00 cents before bouncing back to 93.50-95.75 cents the end of the month. Going into November, prices slipped to 90.50-91.50 cents, and finished still lower at 88.75-89.625 cents/gal. in mid-November. During the month-long period, spots in the Group held a premium of 3 to 8.25 cents over spots at the Texas trading hub.