April 11, 2008

With crude raising to an all time high of $112.21 propane has been following but not at it's historic relative value to crude.  Historically, propane has traded 65-75% of the value of crude. Lately, propane has been trading lower, around 60% of crude.

Many industry experts believe propane inventories will build by around 40 million bbls this summer and peak at around 65-67 million barrels. They believe that Middle Eastern imports will contribute to the larger than average inventory build. If this occurs this gives us average inventories going into winter.

The same industry experts are forecasting propane to get as low as $1.43-$1.44 this summer and run up as high as $1.64 per gallon.

It is our belief that you should sell what you buy and buy what you sell. Most traders will readily admit that in today's market they can't predict what the market will do. As a retailer, the same holds true in our opinion. When it comes to your prebuy positions, you should be evenly hedged.