Debt Relief, Negotiation, Solutions, Elimination | Understanding The Propane Futures Market

Understanding The Propane Futures Market

Posted on June 17, 2010
Filed Under Investing and Speculating | Leave a Comment

When thinking of online fundraising, there are a variety of ways to make money.  Simply put your money in a CD?  That might be the way to go if you want simplicity and security, low risk, low profit.  Some people venture beyond this, and involve themselves in the commodities market.  This is known as speculating, not investing.  You’re betting that you can make money….  Bet, just like in gamble!

Propane is an extremely important commodity, and one that is regularly traded on large markets. It is important because it is domestically and internationally used as fuel, and is in high demand around the world. People can make a huge amount of money trading propane futures.

Propane is sold on the New York Mercantile Exchange under the symbol PN. Futures are delivered every month with prices that are measured in US dollars, as are most commodities. A typical propane contract is 1,000 barrels of propane, at 42 gallons to the barrel. Propane futures have a price limit of twenty-five cents for the gallon ($10,500 per contract), in order to attempt to stabilize the market. This means that if trades are adjusting the price by that amount for five minutes, trading is halted for five minutes. This helps prevent a panic from sending the propane market into a topspin. The minimum fluctuation is $4.20 per contract, or $0.0001 per gallon. Propane is traded for fifteen consecutive months on the exchange with one month off.


Recently, propane futures prices have been very stable. Supply of propane is pretty reliable and there have been few days that the price of propane has changed by more than five percent in a day. The price of a contract has been constant at around $100 per barrel, or $42000 per contract.

Recently, the market has been disturbed slightly due to the halt in drilling in the gulf coast, which means that the price of propane has gone up approximately twenty five percent this year, and is likely to continue to go up. This has led to a lot of speculation in the market. However, it should be noted that these prices are still far more stable than many other petroleum products that are traded on the New York Mercantile Exchange. Propane is definitely a good bet right now.

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