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!
Yesterday we were looking at the OPEC announcement to cut crude oil production by 500 M Bbls/d, and the subsequent announcement that Saudi Arabia would maintain its voluntary and additional 400 M Bbls/d production drop. Just to show how difficult it is to gauge reality from rumour, there were strong noises coming out that earlier, Saudi Arabia and Venezuela had actually proposed a 500 M Bbls/d increase, even though this was of course strenuously denied.
As Thanksgiving holidays approach over in the U.S., we’re experiencing this paradox of having the signs of winter in the midcontinent, stocks dropping over 6 million barrels throughout the U.S. in the last two weeks, but propane exports have just hit a season’s high, with over 1.36 million barrels moving over the docks in the U.S. Gulf, U.S. east and west coasts. Mont Belvieu propane prices have surged on the back of not only the cold weather, but also the hefty export volumes, ending up close to 56 cents/ gallon, while the market was below 40 cents/gallon only 3 months ago, that’s up 40%.
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.