Market Insights

December 15, 2015 • Posted in Market Insights

Week of December 14, 2015

  • Crude prices fell dramatically last week with Brent below $40 and WTI just below $37 per barrel despite a strong inventory draw; the drop was blamed primarily on disorder among OPEC members:
    • OPEC members want Saudi Arabia to cut production and it refuses to do so
    • OPEC continues to produce with no plans to cut output, and production is actually growing as Iraq increases supply and Iran looks for $30B in oil contracts
    • The supply surplus is over 1.5 mm bbl/day
  • Unseasonably warm weather in the US also remains a significant factor
  • LPG cash costs also took a hit, falling by 8% for propane and nearly 11% for butane as feed prices declined
  • Light feeds still enjoy a significant advantage over heavy feeds despite falling oil prices
  • Propane and ethane costs are expected to see a bump soon with some temporary support, though the mid-term outlook is bearish

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