However much we like to try to put crude oil and natural gas prices in the back of our minds, mainly because none of us really know enough about them, they are still the catalyst for what happens next in the LPG space. Today I explore what’s probably going on in the heads of those oil and natgas players, as they assess what’s going to happen next, and what will be the driving forces. Whether it tells us any more than we already know, or directs us in a certain path on LPG, well we have to wait till I get to the end.
We make decisions every day, some good ones and some bad, normally those judgements are made to get things done, but on occasions traders will decide to do nothing, to wait, for a market to move to their desired target, or to wait for something to just change. As we approach a significant period in the year, where seasonality starts to have an increasing influence on our market, traders are naturally a little hesitant, waiting and wondering what happens next.
There’s nothing that makes a ship owner smile more than seeing a decent number of ships getting fixed in the market, of course the grin widens if the rates are also edging up, and if the levels are jumping up, well I’ll leave that one for you to decide. As all eyes last week were focused on the consequences of the drone attack at Saudi Arabia’s key crude oil processing facility in Abqaiq, charterers hesitated for a while, but not for that long.
The power struggle in the Middle East may well have taken a new and more immediate twist, potentially sending huge shockwaves through the oil markets once the weekend is over and electronic trading commences Sunday evening. As a result, the whole international LPG complex faces a major jolt, not only on the back of any spike in crude oil pricing but also potentially as a result of production cutbacks in Saudi Arabia.
There’s not really a similar sector anywhere in the international oil and gas industry that performs the same role as the “midstream” does in the U.S. market. I can remember my mother would irately say, when I interrupted her for some reason, “don’t stop me in midstream”, otherwise it wasn’t a word often used in the Hill household.
I remember arriving at Getty Oil’s guest accommodation, part of a larger compound situated in the Neutral Zone, a sector of 2,250 square miles of land between Kuwait and Saudi Arabia, where Texaco were producing oil from their concessions in the Wafra, South Fuwaris, and South Umm Gudair oil fields.
I’m just squeezing into my morning suit and putting on my top hat, as we head off for our annual Royal Ascot, day at the races. Usually I’m going thinking, how far under 90% of naphtha will the petrochemical buyers push the propane market in Europe, or will our customers try to push dates back again or isn’t it time for buyers to start stock building at the bottom of the market.
There’s nothing like an incident to spark price movement. Thursday morning’s suspected attack near the entrance to the Persian Gulf have stoked, not only fears of a military confrontation between the U.S. and Iran, but also the oil price, up as high as 4.5% on early trades. This just seems a few hours after all the talk was about oil prices sinking 4% on the back of faltering demand.