Week of October 12, 2015
- Crude oil rallied last week as Brent shot above $53/bbl and WTI neared $50/bbl on Thursday.
- Reports indicate that US stocks grew 3.1 MM bbls but prices continued to rise as tensions in Syria grew on Russia’s entry into the conflict. The rally may be short as Syria is not a significant producer of crude.
- A weakening US dollar also gave some support to prices.
- Baker Hughes lowered its rig count in the US, but the reported crude inventory growth may be due to production efficiency improvements from existing producers.
- Natural gas prices remain relatively steady around $2.49 per MM Btu as inventories grew. Seasonal demand for gas in the heating market will soon ramp up.
- Propane and butane prices are already up, making ethylene the favored steam cracker feedstock. This means less propylene production from steam crackers but that will be offset by PDH and ethylene metathesis production as cheap ethylene gives these units better economics.