Non-LST normal butane in the US Gulf has gained 14.1 cents on the week, Platts data showed Friday, on low inventories and seasonal blending demand, market sources said.
Non-LST butane prices were heard trading at $1.90/gal Friday morning, up 3.90 cents/gal from Thursday's assessment.
The latest inventory report by the American Petroleum Institute showed a 5.96-million-barrel decrease in total US stocks from September to October.
For the Gulf Coast region, the largest holder of normal butane stocks, inventories were down 4.195 million barrels in October.
"Producers are buying so it must be tight," a Gulf Coast NGL trader said.
Butane stocks follow seasonal RVP requirements. In winter months, when RVP requirements increase, more butane is blended into gasoline. In the warmer months, when RVP requirements are lowered, less butane is blended and prices tend to fall.
Butane stocks typically peak in August or September, according to Energy Information Administration data.
Butane can also be used as a petrochemical feedstock, and cracking butane yields high percentages of propylene relative to ethane and propane. However, cracking margins for butane are at the lowest level since January 13, 2012, according to Platts data. Cracking butane is currently estimated to result in a loss of 5.07 cents/lb, according to Platts data.
Butane prices can still climb for gasoline blending, according to market sources.
"Prices tend to flatten out in February," a Gulf Coast broker said.
