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Propane prices fall further as crude oil posts another week of losses

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Propane prices fall further as crude oil posts another week of losses

Theprice of propane dipped during the trading week as another week of losses incrude oil and improved inventory data for propane added pressure.

LoneStar pipeline-grade propane at Mont Belvieu fell 1.50 cents to trade at 48.80 centsper gallon in the week ended July 8, while non-LST propane declined 1.10 centsto trade at 48.55 cents per gallon. Prices at the hub in Conway, Kan., dropped1.50 cents, and traded at 45.45 cents per gallon.

Thefrac spread decreased 1.63 cents to 17.55 cents per gallon on July 7 andcompared to 19.18 cents per gallon on June 30, according to data from S&PGlobal Market Intelligence. The average NGL barrel fell 6.2% between the twodates while natural gas prices declined 5.0%.

TheS&P Global calculated fractionation spread, or frac spread, is thedifference between the weighted average price of natural gas liquids and theprice of natural gas on a Btu basis. It is a general indication of the profitmargin that a natural gas processor would expect to receive when the liquidsare fractionated.

Theoil market fell for the third time in the last four weeks, with prices duringthe week losing $3.58/bbl and settling at $45.41/bbl on July 8.

"Theoil complex is heading for the third weekly loss in the last five weeks withthe last trading session of this shortened week still to evolve," DominickChirichella, principal at Energy Management Institute, said. "Thecombination of mixed oil fundamentals and signs that the global economy may beslowing have pushed another batch of bulls out of the market and to thesidelines."

Thepropane market was also pressured by inventory data from the U.S. EnergyInformation Administration, which showed an increase in propane and propylenestocks of 2.72 MMbbl in the week ended July 1. The gain helped to push thesurplus to the five-year average up to 23.41 MMbbl from 22.73 MMbbl in theprevious week.

Weeklyexport data has not been closely tracked by analysts, who have relied on othersources or have looked at the inventory data by region to determine changes inexport activity. Inventories in PADD 3 built 1.76 MMbbl during the week endedJuly 1 while PADD 1 fell 97 Mbbl.

Tradershad suggested that inventories would rise because isconducting planned maintenance on its export docks during the last week of Juneand first week of July.

"Lookingfor more detail on the reports, we see that production data rose 35 Mbbl/dayand the Gulf region experienced its largest build of the spring and summertimeframe," J.D. Buss, trading manager at Twin Feathers Consulting Inc.,said. "The 1.7 million increase in the Gulf clearly illustrates thatexports were on the low end last week as the Enterprise docks were undergoingmaintenance."

Thepropane market also got to further digest the data the EIApublished June 30, which showed that inventories in April gained 7.48 MMbbl andreached the highest level for any April on record.

Propanedemand in April lost 242 Mbbl/d and fell to 918 Mbbl/d, which helped the daysof supply rise to 80.5 days from 57.2 days in March.

Augustnatural gas prices finished the holiday-shortened week with a loss of 18.6cents, with prices settling at $2.801/MMBtu.

of natural gas added39 Bcf in the week ended July 1, according to the EIA. The injection missedexpectations that called for a build in stocks of 44 Bcf.

Market prices and includedindustry data are current as of the time of publication and are subject tochange. For more detailed market data, including SNL powerand naturalgas index prices, as well as forwardsand futures,visit SNL Energy's Commodities Pages.