Watch propane price curves to chart a course
January 3, 2023 By Mark Rachal
Mark Rachal, director of research and publications with Cost Management Solutions, looks at the forward price curve for propane.
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Mark Rachal, director of research and publications with Cost Management Solutions, looks at the forward price curve for propane.
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Our predictions were a little right and wrong. We saw the potential for lower prices, but we significantly underestimated the potential size of the drop.
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We are at the point of rejection occurring, but it has not been based on our premise that natural gas prices would rise faster than crude and propane’s price.
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The propane industry avoided what one leader called a “catastrophic” situation when Congress intervened to prevent a national rail union strike.
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With propane at such a low value, any change in propane’s fundamentals will allow prices to rise with crude, and prices could rise with crude regardless.
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Inventory is 9.7 percent above its five-year average. We have only seen inventory higher than this four times in the past 19 years, says Mark Rachal of CMS.
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In addition to the weather, propane marketers now must consider how energy market movements owing to the war in Ukraine could impact their operations.
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Mark Rachal of Cost Management Solutions offers steps propane buyers can take to protect themselves from rising propane prices this winter.
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Mark Rachal, director of research and publications for Cost Management Solutions, addresses the fundamental drivers of propane inventory levels.
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Propane prices are mostly influenced by crude’s price, not natural gas’s price. But the vast majority of propane supply comes from natural gas processing.
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