Gas Market Report.

(From Lloyds List)

NORTHWEST EUROPE: The large propane market is gradually rising on the back of continued strength of crude but keeps finding resistance with lack of ullage for prompt tons. Talk in the low mid $440s has not come to anything concrete but a couple of deals are thought to have been concluded on a floating basis. Prices are expected to remain in this area for anything end November'first decade December delivery but expected to rise into the low'mid $450s for later tons after BPAP has been posted which is expected to be around the high $420s level.

Butane has gained strength since last weeks report on the back of crude and buyers having to cover positions. Prices are assessed in the high $440s low $450s with one position thought to have been covered above this level but not confirmed. Most players are convinced that more strength on butane has yet to come but may not be seen until after BPAP which can be expected to be posted in the $430s.

Coaster propane activity has increased over the last few days as buying interest returned to the market. Refinery product remains scarce despite relatively mild weather over most of NW Europe, so this increased demand has been covered by exterminal product. Fob numbers have therefore moved upwards through the mid $440s and into the low $450s with potential sellers now talking in the midhigh $450s. Spot demand for cif propane cargoes is still quite thin with most importers more or less covered by contract volumes. Workable cif numbers are nevertheless judged to be somewhere in the $470s.

The butane coaster market has also been active this week. With naphtha and crude prices increasing the market has seen more buyers emerging. Product is available in the area and petchem users have reemerged as an outlet. Prices are strongly related to the type of end user and the product quality. We have therefore seen a premium on normal and iso butane against mix butane to the extent that in certain cases the cif price cheaper than the fob. However, a fob price level circa $440 with a cif price circa $460 is a workable assessment.

M EDITERRANEAN: Refrigerated cargoes Various trades have been concluded with one 10'10 split cargo for Spanish Mediterranean early December arrival ex North Africa plus two 20 kt propane South France first half December arrivals respectively ex Red Sea. Another 30 kt propane to proceed USEC from North Africa and talk of another being negotiated basis East Med destination.

Local propane and butane avails are reported tight for the rest of the year. Players now waiting for December Sonatrach posted which are expected to be between $420 and 4$30, whatever the grade, i.e. following expected trend for BPAP and contract posted prices.