(Dec. 6, 2016) Spot propane prices posted significant gains last Thursday after showing little movement earlier in the week. The moves in spot prices followed the rise in oil prices on Wednesday and Thursday, which were the result of news that OPEC had reached an agreement to reduce production by 1.2 MMbbld during its recent meeting in Vienna.
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Last Thursday, Mont Belvieu non-LST propane mid-morning was trading higher for buyers and for sellers from earlier in the week.

Trading in the Group 140 market (Conway) was also up for buyers and sellers.

Elsewhere, U.S. and international crude futures were trading above $50/bbl. West Texas Intermediate (WTI) crude oil moved up $1.27, or 2.57%, to rest at $50.71/bbl. Brent crude, the global benchmark, was up $1.41, or 2.72%, at $53.25/bbl.

Meanwhile, the propane industry is watching closely in the wake of last Wednesday’s OPEC meeting in which an agreement was made to cut production to 32.5 MMbbld. This marked OPEC’s first concerted effort to cut output since 2008. The action sent U.S. crude prices up more than 9% last Wednesday. The cut, representing about 1% of global production, will help to reduce a supply glut that has kept the lid on prices for more than two years.

The cuts are set to begin in January, and traders will watch to see if cartel members actually adhere to their promised cuts and if there is an impact on the continuing oversupply of product.