It’s been somewhat of a topsy turvy week in the energy sector, as market players try to wriggle out on the other side of the bed each morning, especially on Valentine’s Day! As always, once we’ve had a few weeks of bad news, driven by a worsening but not yet catastrophic coronavirus epidemic, we know that around the corner there will be change, whether it’s tomorrow, next week or next year. So, can we say there’s been any change yet?
Before I start, I must say the headline I’ve used is nothing to do with swearing, although having said that, I did find time for a chuckle this week, hearing President Trump, in his post impeachment acquittal celebratory speech, say the word “bull****”, a word maybe a little more acceptable across the pond than here in the U.K., especially on the BBC. Although the live broadcast had no time to react, the subsequent news programmes had the second syllable bleeped out. The BBC always seems to be trying to get what is wrong, right, albeit after the event!
I read somewhere this week that after the trials and tribulations of the first month of a new decade, the last few days of January have been “very unremarkable”, but I beg to differ. To me the most important announcement for months came to the surface, specifically impacting LPG, not some knock-on effect of an action or decision made outside of our industry. To set the scene, it was 1000 hours on Wall Street, 0900 hours in Houston, the Wall Street Journal, CNBC, Bloomberg and the Motley Fool, to name just a few, had their pens, electronic transcribers and microphones at the ready.
I used to get excited when the Gastech conference venue was about to be announced each year, the destinations were normally one of the big attractions for LPG players looking to get away from the dreary slog of the trading desk, Langan’s Brasserie or Cecconi’s for lunch, and Shepherd’s market for a few beers at night. You have to hand it to the pre-millennium traders for their dedication to the cause.
When last week’s market looked as if it had had enough of just heading-up in one direction only, it usually would mean heading the other way faster than you would expect, but hold on, within just a week this doesn’t now appear to be the case, and market actions are pushing in all different directions, meaning you just have to love the world of LPG! To quote an English saying, I get the feeling it’s time to make hay while the sun shines.
Most people have been back at their desks for a week already since the end of the festive holidays, and what a week it’s been. Crude oil prices, actually settled on Friday, below the levels prior to the assassination of General Soleimani, with Brent around $65/ Bbl. The week seemed to have this macabre stage management feel to it, with missiles launched at U.S.
Happy New Year to everyone in the world of LPG. And what a festive season to remember, and I’m not talking about presents, turkey and seeing in the New Year with your favourite tipple. The dislocation in the market has gained even greater momentum over the last two weeks, as the ARB has widened to over $300/ mt for the prompt month of January 2020. For propane that’s the equivalent of over 60 cents/ gallon. And yet the producer, having shifted his barrels to Mont Belvieu, is struggling to get much more than 45 cents/ gallon for his product.
We’re coming up to the Christmas festivities and the sentiment in the market is extremely robust. Although the physical commotion isn’t anywhere near resembling Oxford Street on Christmas Eve, in itself it’s maybe a hint that there aren’t that many spare cargoes loitering around in the market, especially for delivery in January 2020.
It feels as if the political baton has been passed over the Atlantic, with the announcement yesterday that the Democrats had won the vote in the House of Representatives to impeach President Trump. As we in the U.K. had to go through the embarrassment, and the peculiarities of the House of Commons rules and procedures, as one side favouring remain, representing different parties but not always their constituents, out-voted a Government aiming to put in place what they described as the vote of the people to leave the European Union.
It’s that time of year again when we all try to make predictions of what’s going to happen next year in the LPG industry, and start to think about setting a few New Year’s resolutions, some we’ll keep and others we won’t. Will it be more interesting than this year, well the LPG market always throws up surprises, and that is about all we can guarantee. Bring on the new decade!