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By: Peter Rowley, Risk Manager - Energy
C2: Ethane prices took a three-day slide into the weekend after failing to retake the 34.50cpg level reached on 8/6, a high-water mark is just 1cpg under the 2019 highs that I continue to flag as potential near-term resistance. WoW losses totaled .875cpg or a 2.53% decline, the worst week for headline Ethane futs since early March. Friday’s price action was relatively benign, as summer Friday apathy was out in full force. As such, the futs curve was left close to unchanged with daily losses totaling .125-.25cpg for each expiration.
Sentiment: Despite last week’s dip, the trend continues to be higher but upside could be limited by 2019 highs of 35.50cpg. Today NG is leading the energy complex to start the week with gains of 1.2% but are still pricing 3.75% lower over the past 5 days.
C3 MTB: Propane prices saw gains to end the week with Friday’s action for Sep21 futs spent in a tight range between $1.15-$1.550/gal. Sep21 hit the high end of the range at mid-day but saw some sell side pressure into the close to push the headline contract back towards the lower end of the days range but are now pricing at 7.5 year highs after weekly gains of 5.125cpg.
Like Conway and Nc4 curves, the LST futs curve saw Friday’s strength isolated to the front end of the curve, with gains turning to losses in Apr22 and beyond. Cal23 and Cal24 saw the largest declines to end the week, with both shedding ~.75cpg at 74.375 and 667.00cpg respectively. Backwardation continues to increase through winter, with WoW gains in Q421/Q222 totaling 2.125pcg at 24.25cpg.
Sentiment: Looking like another Monday where we open lower and I am targeting an open for Sep21 LST around $1.14-$1.135, a loss of as much as 2.25cpg. Downside support first flagged at $1.11 followed by last Monday’s lows of $1.08625/gal.
C3 CWY: Sep21 Midcon Propane prices rode a four day streak of gains into the weekend, with WoW gains totaling 5.25cpg or .7%. The weekly gains were the strongest in six weeks and finished out Friday’s session with closing range strength proving to be the high of the day. The basis between LST took a step back towards the end of the week, but remain at seasonally elevated levels. The N/S weakness came after PADD3’s inventories seeing another counter seasonal pull while inventories are climbing in the Midwest ahead of harvest and winter. Sep21 N/S peaked at over 1.25cpg on Tuesday and finished the week over .50cpg lower.
The futs curve saw the gains isolated to front seven expirys with bal21 contracts seeing relatively even gains of .375cpg. Backwardations accelerated through Q4-Q122 as risk premiums remain inflated for winter months. As such, cal22 and cal23 saw those gains turn to losses, with the largest losses seen in cal23 which totaled .875cpg or 1.14% at 75.375cpg.
Sentiment: Expected to take a step back to start the week along with outside energy markets and MTB Propane. I am expecting Sep21 to give back Thurs-Friday’s gains but am flagging last week’s lows as support at $1.0975/gal.
C4: LPG prices were firmer heading into the weekend, bucking the trend of the rest of the energy complex. Sep21 nc4 futs finished the week at $1.3450/gal, a daily gain of nearly .875cpg or .6%. That level proved to be the high print of the day and week and are now at 7.5-year highs. Despite the continued strength, the front end of the curve was the only part to settle in positive territory with Sep21 seeing the largest gains of .875cpg and dwindling to losses of over .50cpg in cal23.
Sentiment: Butane prices diverged from last week’s benign action in WTI as crude is hovering around its 100d MA. However, I don’t think nc4 is going to escape the near 3% losses from the overnight energy complex. I am flagging downside support at $1.30/gal followed by last Monday’s lows of $1.2675/gal.
C5: Headline Natural Gasoline futs were the second half of the book ends that were the laggards of the NGL stream. WoW losses for Sep21 c5 futs of .625cpg or .39%. Friday’s losses totaled 1.50cpg which marked back-to-back sessions of similar losses after headline futs peaked at $1.61125/gal on Weds. C5 futs are now 8.125cpg or 4.9% off the recent highs reached at the end of July. Prices failed to meaningfully trade above similar levels in 2018 and haven’t been back above $1.70/gal since the price collapse from highs in 2014 at $2.23/gal.
Sentiment: Monday’s have recently been ugly for the petroleum complex, with today’s losses currently totaling 2.75% or $1.09/bbl and similar losses would ~5cpg for C5 futs
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