The Best Time to Buy Was When?

Looking at propane prices for the first half of 2006, it seems that perhaps the best time to buy propane was during the latter part of February and early March. Historically, that time is typified by rising prices.

Another comparison finds a similar scenario as the industry exited both the winter of 2004-2005 and 2005-2006: as summer arrived propane prices were rising, albeit in 2005 prices were heading toward 90.00 cents/gal. and this summer they are headed toward the 115.00-cent range.

Checking Mont Belvieu and Group 140 (Conway, Kan.) spot and posted propane prices for the first half of 2006, the lowest spot prices were during the week of Feb. 16 when Belvieu spots were 88.25 cents/gal. and the Group was 85.25. That week Conway’s posted average was at its low, 89.127, while Belvieu’s average bottomed out on March 9 at 9 1.263.

For the first half of the year, the highest prices were during the week of June 29 when Belvieu spots hit 114.50 cents/gal., the Group 113.25, and Belvieu's posted average jumped to 117.288 and the Group was 113.577.

 

 

 

 

 

Spot prices began their ascent in early April and have remained over 100.00 cents/gal. since April 13. Belvieu’s posted average jumped above 100.00 at the end of March, moving from the lowest prices of the year to the highest in less than a month for both spot and posted prices.

Through the end of June, Belvieu spots averaged 100.1 2, the Group 98.59 cents/gal.; Belvieu’s posted average was 104.06, and Conway 101.32.

The pricing differential between the two markets has continually favored a premium to the Gulf Coast, although a few times in those months Midwest prices did rise above Belvieu’s levels. Belvieu spots held the greatest premium to the Group, 4.75 cents/gal., on March 30. At the same time, its posted average was 8.252 cents higher.

A 2005 Recap

For the first half of 2005, propane prices remained strong heading into summer, rising in mid- to late-June. Mont Belvieu spot propane was at its lowest on Jan. 10, when the market was at 70.25. Group 140 spots dipped to 70.50 on Feb. 7. Both hit their high in late March, with Belvieu peaking at 95.00 and the Group at 93.00. Through late June, Mont Belvieu spot propane for the year averaged 80.58 cents/gal., ranging from a low of 70.25 to a high of 95.00. Group 140 spots averaged 80.41 cents/gal.

The average posted price of propane at Mont Belvieu and Conway reinforced just how high prices had been in early 2005. As with 2006, both locations saw their lowest prices during the heating season-and those prices still weren’t all that low.

Mont Belvieu bottomed out on Jan. 10, 2005 at 76.225 cents/gal. The Conway average was at its lowest on Feb. 14, 2005 when it fell to 74.780. Both locations were at their highest points during the week of March 21, when Belvieu rose to 95.992 and Conway 93.188.

Holding the Premium

In terms of how the two markets related to one another during the first half of 2005, the Group began the year holding a slight premium over Belvieu although during the winter that switched to Belvieu holding the premium. But, once again, Group 140 spots were higher than Belvieu’s. Since the start of May, Group 140 spots were from a quarter cent to as much as 4.5 cents higher than Belvieu.

—Pete Ottman