What does $50 crude mean to propane prices?
The chart to the left shows the price of propane at various percentage relationships to crude. We thought about beginning the price range at $55 and decided we would not subject ourselves to that pain. Many market watchers suggest that we will hit $50 before the end of the year. Then we see reports that suggest that crude prices will pull back some before they make the assault on the $50 level. If crude prices were to drop to $44 a barrel that puts a nice pull back in the current level of propane prices. Propane prices mid-week disconnected from that solid trend with crude prices. Even dipping below our petrochemical guide of 77.5% of crude. We are using a higher relationship to crude than normal because of the high demand for petrochemical products with the stronger economy. The propane demand and price to crude relationship chart below shows some demand destruction occurring (most likely in the petrochemical sector). Thursday’s market saw some selling pressure in propane and some of
