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ESAI Outlook: LPG market’s bullish fundamentals to fade fast

Global LPG fundamentals in the second half of 2017 are shaping up to be much less bullish than in the first half of the year, according to ESAI Energy’s newly published Global LPG Outlook.

The report details how decelerating demand growth and the renewed expansion of supply from North America fractionation will cause bullish fundamentals to fade fast in the second half of 2017. This reverses the scarcity of the first half of the year, in which Middle East LPG exports collapsed following OPEC production cuts.

Led by demand trends in China and other Asian markets, annual demand growth will slow to 250,000 bpd this year, 110,000 bpd less than in 2016. Meanwhile, the renewal of NGL supply growth in North America is well underway. As the year progresses, gains in supply will catch up with demand growth and bring the market back into balance.

“Global inventory data reveal the two turning points in the market,” said ESAI Energy Principal Andrew Reed. “Our comparison of the year-on-year change in stocks, an indicator of whether the market has been in surplus or deficit for the previous 12 months, shows that the balance tipped into deficit in early 2017. But based on our projections for supply and demand for the balance of the year, we expect the market to quickly move back into surplus.

“The impressive builds in US propane stocks in the past six weeks are evidence that supply growth is gaining on demand. The build in US propane stocks over the next several months will exceed the expectations of many.”

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The US East Coast will send out its first LNG exports in early 2018 as Dominion Energy’s Cove Point LNG export facility in Lusby, Maryland becomes operational.

The New LNG Imperative

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The shale gas boom established the US as the world’s leading natural gas producer and is responsible for billions of dollars of investments in the US gas processing industry. Since 2012, the US has witnessed unprecedented growth in new gas processing capacity and infrastructure. This rise is due to greater production of domestic shale gas, which is providing cheap, available feedstock to fuel the domestic gas processing, LNG and petrochemical industries. New gas processing projects include the construction of billions of cubic feet per day of new cryogenic and gas processing capacity, NGL fractionators, multi-billion-dollar pipeline infrastructure projects, and the development of millions of tons per year of new LNG export terminal construction. Attend this webcast to hear from Lee Nichols, Editor/Associate Publisher, Hydrocarbon Processing, Scott Allgood, Director-Data Services, Energy Web Atlas and Peregrine Bush, Senior Cartographic Editor, Petroleum Economist as they discuss the future of LNG and the application of Energy Web Atlas, a web-based GIS platform which allows users to track real-time information for every LNG project.

November 29, 2017 10am CST

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