US LPG exports are facing a cloudy outlook amid the coronavirus pandemic and the oil market share war, which drove oil prices off a cliff. Phillips 66 last week said that US oil products demand had fallen by 20% after Washington took measures to curb the outbreak. The decline grew further to more than 30% after California ordered residents to stay at home on March 19.
The pressure on gasoline and naphtha prices weighed on US butane and natural gasoline prices. Mont Belvieu EPC propane fell to $128/ton on March 23, the lowest since 1999. Meanwhile, Mont Belvieu EPC butane, natural gasoline, and ethane fell to $91.75/ton, $91.75/ton, and $68.90/ton, the weakest since 1993, 1999, and 1993, respectively.
Despite the US price falls, the propane arbitrage to Asia-Pacific and Europe are not narrow enough. Hence, it resulted in at least eight cargo cancellations or delays from the US Gulf Coast in April, market sources said.
In the face of collapsing demand and prices, US shale producers and midstream operators are cutting their capital spending for this year. This is likely to slow the NGLs production growth in US main shale regions and result in postponements or even cancellations of upstream, midstream, and downstream projects.
