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LPG Report: US Propane Rally? Blink and You’ll Miss It

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Summary

It was a fortnight of two halves for the LST/FEI as price action in the prompt rallied to -$200/mt but has subsequently fallen off. Initial strength came from weakening freight rates but this was exacerbated by a bullish market reaction following recent EIA stats. However, LST spreads have given up the previous weeks’ gains.

FEI and CP both saw flat price strength, but the differential between the two benchmarks was largely rangebound over the past fortnight. This was the case until June 19, when FEI saw strong buy-side interest, which pushed the July FEI/CP up from $45/mt to $49/mt.

Open interest shows significant market interest in the propane complex, with levels for the major benchmarks exceeding their 5-year averages across the curve. Market risk is concentrated in the FEI complex, while the largest open interest gains were in the Jul’24 East/West and Q1’25 LST/FEI.

EIA stats for the week ending June 07 indicated a lower-than-expected build in US propane and propylene inventories at 978kb, while PADD1 saw a surprise build of 579kb.

Correlations between the major propane benchmarks were generally strong and positive, with the exception of C3 LST which has lagged behind the international benchmarks over the past week. Flat price in LST has remained stagnant whilst FEI and CP have continued to rally.

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Our team of skilled analysts, by utilising the depth and breadth of Onyx's proprietary data, position ourselves at the cutting edge of market analysis. This unique vantage point grants us an unparalleled perspective in the market, enabling us to identify emerging trends and lucrative opportunities.