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3 December 2014
ICE Brent Futures at 16:30
Brent Crude Oil ($/bbl)
Month
Price
Change
JAN
70.88
-0.83
FEB
71.34
-0.75
MAR
71.95
-0.69
Energy Futures at Settlement
WTI Crude Oil ($/bbl)
Month
Price
Change
JAN
67.38
+0.50
FEB
67.46
+0.46
MAR
67.56
+0.41
Table of Contents
OPIS LPG Full Day Prices
p. 1
OPIS LPG Mont Belvieu
Snapshot
p. 1
OPIS Monthly Prices
p. 2
OPIS Freight Rates &
Netbacks
p. 2
OPIS NWE Propane
Forward Prices
p. 2
OPIS Global Forward
Prices
p. 3
END DECEMBER PHYSICAL BIDS APPEAR; JAN SHOWING CONTANGO
In Europe, a late December cargo offer was greeted with 2 bids Wednesday. December
in Europe was heard to be sold in 1H and partially sold in the 2H with possibly up to two
cargoes unsold.
December swaps tailed off some $6/t from the previous day, closing with a well traded
average of $439/t inside the 4:00-4:30pm timeframe. January was noteworthy for a
similarly well traded session by volume as players look to January for firmer direction.
Physical discussions continued the week with an offer emerging once again from a
Norwegian producer for a 23-27 December delivery cargo at $431/t and December
quotes +$5/t. A European based trader bid on the same dates at $420/t and December
-$20/t. A similarly timed cargo was sought by a European retailer at $426/t and December
quotes -$6/t. No deals were heard.
Neither bids nor the offer met the criteria for forward delivery for assessment purposes.
OPIS adjusted the spot differential $2/t higher to -$14/t to the December reference
month, following higher buying ideas for cargoes arriving later in the month compared to
the last spot deal at -$18/t last week. An increase in retail interest provided a supportive
factor, with colder than average temperatures hitting much of the European continent.
Feedstock importers were heard to be certainly concluded for their 1H December
purchases, whereas in the 2H December at least 2 trader cargoes were heard potentially
unplaced, with one expected at the very end of December.
The propane to naphtha spread for December pulled in $2/t to close at -$121/t with
January moving wider by $2/t, closing at $111/t.
On the arrivals side, and already priced into markets, the first shipment of up to four possibly five - VLGC cargoes was seen arriving in the northern North Sea from the U.S.
Gulf Coast; the BW Birch is expected into Teesside on 4 December.
One of two VLGC’s – the Gas Friend and Aurora Leo – previously heard to be uncertain
as to whether or not they are Europe bound in December, seemed to be heading to Asia.
A trader commented, ‘’at least one of them should go east.’’
Otherwise, confirmed cargo redirections and Europe-Med cargo flow appear to be
(Continued on Page 3)
OPIS LPG Settle Prices ($/mt)
Location
Propane CIF ARA (ToT Cargoes)
Butane CIF ARA (+4,000mt)
Propane FOB Med
Butane FOB Med
OPIS CIF ARA Propane Swaps ($/mt)
Mean
Balance December 4:00-4:30pm 439.00
Physical-Paper Differential
-14.00
Low
423.00
494.50
468.00
543.00
High
427.00
498.50
472.00
547.00
Mean
425.00
496.50
470.00
545.00
OPIS LPG Mont Belvieu Snapshot ($/mt)
Mean
Change Location
-6.00
Mont Belvieu Non-TET Propane
325.63
+2.00
Mont Belvieu Non-TET Butane
394.68
Change
-4.00
-6.50
-5.00
-5.00
Change
-7.82
-7.93
MTD Avg
431.667
507.000
476.667
553.333
MTD Avg
336.913
404.303
OPIS Spot Prices ($/mt)
(c)Copyright by Oil Price Information Service (OPIS), a division of UCG. Reproduction of this report without permission is prohibited. Europe LPG Report is published each business day. OPIS does not
guarantee the accuracy of these prices. Pricing/Editorial Office: 800-275-0950. For a limited copyright waiver, call (888)301-2645.
OPIS Europe LPG Report
3 December 2014
OPIS Global Spot Prices ($/mt)
Date
3-Dec-2014
3-Dec-2014
2-Dec-2014
3-Dec-2014
CIF ARA
CFR Japan
Mont Belvieu Non-TET
FOB Arab Gulf
OPIS 44,000mt Freight Rates ($/mt)
Route
Rate
Change
AG - Japan
83.00
-3.50
NWE C3
Netback
-
Price
425.00
560.50
336.70
500.00
Propane
Change
-4.00
-10.00
-6.51
+33.00
NWE C4 Route
Netback
USGC - NWE
-
December Posted Prices ($/mt)
Saudi Arabia FOB
Algeria FOB
North Sea
Price
550.00
440.00
465.50
Butane
Price
496.50
570.50
406.28
520.00
Rate
Change
75.00
0.00
Propane
Change
-60.00
-105.00
-78.50
Change
-6.50
-10.00
+6.51
+33.00
NWE C3
Netback
350.00
NWE C4
Netback
421.50
Butane
Price
570.00
515.00
518.00
Change
-30.00
-20.00
-26.50
OPIS End of Day NWE Forwards Prices ($/mt)
Month
Min
Max
Mean
DEC 2014
438.00
442.00
440.00
JAN 2015
451.00
455.00
453.00
FEB 2015
445.00
449.00
447.00
MAR 2015
436.00
440.00
438.00
APR 2015
426.00
430.00
428.00
MAY 2015
422.00
426.00
424.00
JUN 2015
424.00
428.00
426.00
JUL 2015
433.00
437.00
435.00
AUG 2015
441.00
445.00
443.00
SEP 2015
450.00
454.00
452.00
OCT 2015
458.00
462.00
460.00
NOV 2015
467.00
471.00
469.00
DEC 2015
475.00
479.00
477.00
Q4 2014
438.00
442.00
440.00
Q1 2015
444.00
448.00
446.00
Q2 2015
424.00
428.00
426.00
Q3 2015
441.00
445.00
443.00
Q4 2015
467.00
471.00
469.00
CAL 2014
438.00
442.00
440.00
CAL 2015
444.00
448.00
446.00
Change
-3.00
-5.00
-8.00
-8.00
-8.00
-9.00
-10.00
-9.00
-10.00
-9.00
-10.00
-9.00
-10.00
-3.00
-7.00
-9.00
-10.00
-9.00
-3.00
-8.00
Time Spread
-13.00
+6.00
+9.00
+10.00
+4.00
-2.00
-9.00
-8.00
-9.00
-8.00
-9.00
-8.00
-- --6.00
+20.00
-17.00
-26.00
-- --6.00
-- --
Pro/Nap
-118.00
-109.00
-118.00
-130.00
-142.00
-149.00
-149.00
-143.00
-138.00
-132.00
-127.00
-120.00
-114.00
-118.00
-119.00
-147.00
-138.00
-120.00
-118.00
-131.00
Naphtha
558.00
562.00
565.00
568.00
570.00
573.00
575.00
578.00
581.00
584.00
587.00
589.00
591.00
558.00
565.00
573.00
581.00
589.00
558.00
577.00
Change
-7.00
-6.00
-6.00
-5.00
-4.00
-3.00
-3.00
-2.00
-1.00
0.00
+1.00
+1.00
+1.00
-7.00
-6.00
-3.00
-1.00
+1.00
-7.00
-2.00
OPIS Global Propane Forward Prices ($/mt)
Month
Belv.
Change
Arb
DEC 2014
326.00
-16.00
-114.00
JAN 2015
332.00
-13.00
-121.00
FEB 2015
333.00
-13.00
-114.00
MAR 2015
332.00
-13.00
-106.00
APR 2015
332.00
-12.00
-96.00
MAY 2015
333.00
-12.00
-91.00
JUN 2015
336.00
-10.00
-90.00
JUL 2015
338.00
-9.00
-97.00
AUG 2015
341.00
-7.00
-102.00
SEP 2015
347.00
-5.00
-105.00
OCT 2015
350.00
-3.00
-110.00
NOV 2015
353.00
-2.00
-116.00
DEC 2015
357.00
0.00
-120.00
Q4 2014
326.00
-16.00
-114.00
Q1 2015
333.00
-12.00
-113.00
Q2 2015
334.00
-11.00
-92.00
Q3 2015
342.00
-7.00
-101.00
Q4 2015
353.00
-2.00
-116.00
CAL 2014
326.00
-16.00
-114.00
CAL 2015
340.00
-9.00
-106.00
CP
-- -502.00
501.00
500.00
491.00
482.00
475.00
478.00
482.00
486.00
491.00
496.00
501.00
-- -501.00
483.00
482.00
496.00
-- -490.00
Change
-- --7.00
-7.00
-7.00
-8.00
-8.00
-9.00
-9.00
-9.00
-10.00
-10.00
-10.00
-10.00
-- --7.00
-8.00
-9.00
-10.00
-- --9.00
FEI
538.00
552.00
551.00
542.00
533.00
529.00
532.00
540.00
549.00
557.00
566.00
574.00
583.00
538.00
548.00
532.00
549.00
574.00
538.00
551.00
Change
-9.00
-10.00
-7.00
-8.00
-8.00
-8.00
-9.00
-9.00
-8.00
-9.00
-8.00
-9.00
-8.00
-9.00
-9.00
-8.00
-8.00
-9.00
-9.00
-8.00
E/W
+98.00
+99.00
+104.00
+104.00
+105.00
+105.00
+106.00
+105.00
+106.00
+105.00
+106.00
+105.00
+106.00
+98.00
+102.00
+106.00
+106.00
+105.00
+98.00
+105.00
Page 2 of 5
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OPIS Europe LPG Report
3 December 2014
OPIS 6-Month Forward Curve ($/mt)
Propane
Propane/Naphtha
Arb
East / West
(Continued from Page 1)
Global Swaps
providing little support to propane prices in Europe. A
propane cargo on the mid-sized Telendos currently loading at
Marcus Hook is heard to be bound for Sines in Portugal
(originally heard as a potential arrival into Europe).
A single cargo of 8kt propane on the Gaz Synergy was
heard to be moving from NW Europe to the Med, currently
enroute, as well as a cargo from West Africa to the Med,
details on the latter were scant at publish time. However, a
later December butane cargo of 20kt was heard to be moving
out of the Med from Algeria to West Africa.
The new dynamics for cargo trade so soon in December
appears to support the view in markets that outlets in Europe
are largely covered for the month, as sellers appear to be
attempting to place cargoes elsewhere. At the same time, the
looming year-end combined with a backwardated forward
picture, is leaving receivers with no option but to keep stocks
to a minimum – keeping financials to the low side and
reducing exposure on the front.
Contango kicked in to naphtha markets with DecemberJanuary moving from flat to a $4/t positive spread
Wednesday. The shift re-starts the front-end of the new year
for the grade with the remainder of 2015 seeing a steady
upside throughout. Naphtha for December closed at $558/t
and January $562/t.
(Continued on Page 4)
Page 3 of 5
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OPIS Europe LPG Report
3 December 2014
(Continued from Page 3)
OPIS Europe LPG Report Methodology
OPIS assesses daily spot propane and butane prices at the key trading
hubs in northwest Europe and the Mediterranean. Editors record and
confirm deals, bids and offers, analyse supply and demand fundamentals,
and gauge market sentiment and outlook. Prices are quoted in US dollars
per metric ton. Times quoted are that of the United Kingdom.
In the northwest Europe propane market, OPIS assesses cargoes basis cif
Flushing for 10-20 days forward. The quantity, grade and quality, delivery
and nomination terms are as per the TOT contract for the current year. For
further details, see http://opisnet.com/methodology.asp#neweuropelpg
Butane prices are for field grade mixed butane cargoes above 4,000mt
delivered 5-20 days forward basis cif ARA.
In the Mediterranean, OPIS assesses field grade and refinery grade
propane and butane fob basis Lavera 5-15 days forward. Cargo sizes are
1,500mt and above.
OPIS contacts a cross-section of market participants daily. Information
published is according to the best available data on the day and is subject
to change. Please direct any enquiries to [email protected]
OPIS Europe LPG Editorial Staff
Karen Tang (London, UK)
[email protected]
+44 779 415 0133
Yahoo: kailin_tang
Diane Miller (NJ, USA)
[email protected]
+1 732 730 2530
Yahoo: dmiller_opis
Dermot McGowan (London, UK)
[email protected]
+44 752 522 5300
Yahoo: dermotmcgowan
Inge Erhard (London, UK)
[email protected]
+44 777 375 7940
Yahoo: ingepopfi
Jessica Nesterak (MD, USA)
[email protected]
+1 301 287 2721
Yahoo: jessica_opis
Jessica Marron (MD, USA)
[email protected]
+1 301 287 2625
Yahoo: jmarron_opis
Ronald Kwan (Singapore)
[email protected]
+65 6337 3519
Yahoo: ronaldkwan1
David Wang (Singapore)
[email protected]
+65 6337 3519
Yahoo: david.opis
Propane was seen supporting a positive spread of $13/t to
January but from then onwards was seen in steady decline in
2015, through to a low in May at $424/t.
Belvieu propane tracked lower by $6/t to $326/t intra-day as
the release of the EIA inventory figures showed a modest
200,000 bbl rise, denting any upside sentiment.
NWE IMPORTS
DECEMBER:
- Berga II, ex-Bethouia, ldg 23-25 Nov, 20kt C3, ETA
Antwerp 1 Dec
- Nav. Leo, ex-Ust Luga, ldg 27-28 Nov, 9kt C4, (2) ETA
Terneuzen 3 Dec
- BW Birch, ex-Enterprise, ldg 16-19 Nov, 44kt C3, ETA
Tees 4 Dec
- Sibur Tobol, ex-Ust-Luga, ldg 28-30 Nov, 9.4kt C4, (2) ETA
Rotterdam 5 Dec
- Kodaijisan, ex-Targa, ldg 17-22 Nov, 44kt C3, ETA
Flushing? 6 Dec
- Alrar, ex-Bethouia, ldg 4-6 Nov, 30kt C3, dest Flushing
- Venus Glory, ex-Targa, ldg 28 Nov-, 44kt C3, offered NWE
- **Gas Friend, ex-Targa, ldg 30 Nov-, 44kt C3, TBD
- **Aurora Leo, ex-Enterprise, ldg early Dec, 44kt C3, TBD
NWE EXPORTS
DECEMBER:
- British Councillor, ex-Karsto, ldg 1-2 Dec, 22kt C3/22kt C4,
dest Far East
**Unconfirmed
PROPANE/PROPYLENE INVENTORIES RISE 200,000 BBL
TO 79.4 MILLION BBL
Propane and propylene inventories rose by 200,000 bbl for
the week ended Nov. 28, according to the U.S. Energy
Information Administration, bucking expectations that called
for a small net withdrawal. Nationwide stocks currently stand
at 79.4 million bbl.
A number of traders and brokers polled yesterday by OPIS
had called for an average drawdown of 650,000 bbl.
However, the build was within the wider range of estimates of
a 1-million-bbl draw to a 200,000-bbl addition.
Inventory levels the previous week fell by a larger-thananticipated 2 million bbl.
In the wake of the report, propane prices fell back from
morning highs. Mt. Belvieu non-TET anys dropped to
61.125cts/gal after posting a pre-report peak of
64.625cts/gal. Conway anys traded as low as 63cts/gal from
a prior high of 67.875cts/gal.
Regionally, PADD2 stocks rose by 200,000 bbl to 26.1
(Continued on Page 5)
Page 4 of 5
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OPIS Europe LPG Report
3 December 2014
(Continued from page 4)
million bbl, while Gulf Coast PADD3 stocks picked up 100,000 bbl to 43.2 million bbl. PADD1 stocks, representing the East
Coast, were unchanged at 6.1 million bbl. PADDs 4 and 5 stocks were also flat at 4.0 million bbl.
Refiner and gas plant production of propane and propylene was 1.620 million b/d, down from 1.635 million b/d in the week
prior.
Broken out to the PADD level, PADD3 production was 965,000 b/d, down from 974,000 b/d the previous week. PADD2
production was 339,000 b/d versus 335,000 b/d the week prior. PADD1 production fell to 143,000 b/d, compared with
144,000 b/d a week before. PADD4 and PADD5 production was down 7,000 b/d, to 174,000 b/d.
Natural gas plants produced 3.087 million b/d of liquids, unchanged from the previous week.
As a measure of implied demand, 1.236 million b/d of propane and propylene was supplied in the week ending Nov. 28.
That was down from 1.554 million b/d seen in the week prior.
Total propane imports climbed to 92,000 b/d, versus 85,000 b/d the week prior. PADD1 imports increased to 48,000 b/d
from 41,000 b/d. PADD2 imports were down 4,000 b/d at 21,000 b/d. Imports in PADD4 and PADD5 inched upward by 3,000
b/d to 22,000 b/d.
The EIA reported U.S. exports at 445,000 b/d, unchanged on the week.
Propylene stocks tallied 3.0 million bbl of total inventory, and were down 100,000 bbl for the week.
Stocks of natural gas plant liquids, excluding propane and propylene, were down 1.5 million bbl to 111.6 million bbl.
VERLEGER: OPEC ACTION JUST A "FIRST STEP"
Phil Verleger was one of the first oil analysts to recognize that key OPEC countries would not cut oil production at their
autumn meeting, and now the noted energy economist suggests that the lack of action merely represents a "first step" that
will usher in a period of dramatically lower prices.
In many senses, Verleger notes, the decision to keep output levels intact can be viewed as a move to restore "economic
order," at least for a time. He believes that the low cost producers -- most notably Saudi Arabia, Kuwait and the United Arab
Emirates -- want the high cost producers to understand that they can survive only when they act in the low cost producers'
interests.
The OPEC "failure" to cut output at the Nov. 27 meeting can best be viewed as a "carefully considered act that is part of a
long-run plan to restore balance to the world oil market."
In his "Notes at the Margin" weekly, Verleger stresses that current price levels will not rapidly shut down high-cost
production. Drilling activity will be reduced dramatically, but the oil will still flow and U.S. production will creep higher.
He hearkens back to the 1980s to find a parallel. In late 1981, oil prices unexpectedly began to fall and U.S. drilling
collapsed. However, actual domestic production continued at a high level until 1986, when prices plunged to $10 bbl.
Between 1983 and 1986, the number of U.S. wells declined 75% from their peak, but oil output fell just 8%. So, the time gap
between lower rig counts and lower production is quite substantial.
Verleger does believe that the price decline will reduce the valuations of firms engaged in crude oil exploration and
production, with some smaller higher levered companies at some point headed to bankruptcy.
But "it will take several years of current price levels or, alternatively, a shorter period of much lower prices to restore OPEC
supremacy," he adds. U.S. production is much more efficient these days. Back in 1983 the active rig count quadrupled, but it
had little impact on production. More recently, the number of active rigs in the U.S. rose from 800 to 2,200 between 2009 and
2014, with production climbing by about 50,000 b/d in the same five-year stretch. The pace of the output increases swelled to
94,000 b/d in the last 12 months, so the rate of increases has been accelerating. U.S. production could continue to increase
(albeit at a decreasing rate) for years.
A predictive model that Verleger employs suggests that Brent prices could drift down to $60 bbl by the end of 2015 if
indeed the International Energy Agency forecasts on supply and demand are accurate and OPEC continues to do nothing.
His economic analysis is particularly salient for anyone familiar with the housing boom. The housing market collapse began
in 2005, but it left the U.S. dotted with exurban construction sites where developments were initiated by builders financed
with various types of high yield debt. The U.S. ultimately benefited from the stock of homes that did get finished, however.
Similarly, wells in the Bakken, Niobrara, Permian and Eagle Ford will keep producing just as the houses financed by bad
debt continue to provide homes for families and individuals.
Verleger concludes with an observation of the challenge faced by OPEC and other exporters. In order to overcome the
"staying power" of shale oil, exporters will have to keep oil prices low for years. If prices do indeed flirt with $50 bbl, the
greatest negative impact may be for the billion-dollar projects for the Arctic and subsalt plays.
Footnote: What happens if the cartel actually raises production to, say, 32 million b/d as new output comes on in Iran, Iraq,
Libya or other OPEC countries? Verleger's predictive model calculates that Brent values might then finish next year around
$30 bbl, and thus crimp some output from North America in the next 12 months.
Page 5 of 5
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