Excessive Volatility in Propane Continues to Push Need to Hedge for both Consumers and Producers

We have officially now reached the end of the summer in the Northern Hemisphere, but the expected stock builds that we have seen have been underwhelming to say the least, with a surprise draw in US stocks most recently. Fears about Propane supplies failing to meet demand have been growing, with the high-demand season just around the corner. Stock levels are now below the seasonal 5-year average and rising prices have been unable to curb demand.

Since April of this year, Propane prices have performed incredibly well, with prices rallying in Europe c. 65% to $750/tn and showing little sign of stopping. Despite the sell off on the Dalian exchange in LPG futures causing FEI flat price to come off, hedgers seem keen to take advantage of this by buying the dip and adding to their existing hedge positions. Looking ahead, it appears that volatility is here to stay with prolonged outages from the US hurricane season and less than predictable stock levels being the new norm.

How can you negate this volatility?

Onyx Capital Group is the largest liquidity provider in NGLs which gives us a unique transparency over what is truly happening in the market. Partnering with Onyx will provide previously inaccessible support across your hedging operations. In such a turbulent market surrounded by uncertainty, we are hearing the case from many hedgers that either they have exhausted their credit lines or they are now excessively expensive but they still want to take advantage of this high price environment. However, with Onyx we have helped them solve these issues by introducing them to new credit counterparties and reduce their cost of trading in doing so.

Whether you are looking to reevaluate and redefine your hedging policy, expand your access to credit, cut down your costs or more accurately manage your hedge timing, Onyx is the market’s chosen partner for this. Contact us today to find out the solution we can build for you today!

Disclaimer:

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