Propane News

Weekly Inventory Results

12/16/21-U.S. propane/propylene stocks decreased by 2.4 million barrels last week to 70.9 million barrels as of December 10, 2021, 8.1 million barrels (10.2%) less than the five-year (2016-2020) average inventory levels for this same time of year. Gulf Coast, East Coast, Midwest, and Rocky Mountain/West Coast inventories decreased by 1.3 million barrels, 0.5 million barrels, 0.4 million barrels, and 0.1 million barrels, respectively.


NPGA Propane Inventory Report Summary


July 2020 Inventory Report.

Over the past month U.S. propane supplies have followed both U.S. crude oil production rates and refinery operating rates. Reductions in propane supplies have been less pronounced as compared to crude oil. U.S. crude oil production cuts were deeper than expected for May and June, but the recovery has been higher than expected, buoyed by a stabilized crude oil market price. This has translated into a somewhat muted reduction and a stronger recovery in propane supplies from natural gas processing.  Refinery operating rates have improved, albeit remain low compared to pre-COVID-19 levels.

The combination translates into total monthly propane production supplies reaching a trough in May 2020 (as reflected by EIA reported data), approximately 1.97 MMb/d, and then stabilizing, with some ebbs and flows on a monthly basis through June 2021. IHS Market forecasts total monthly propane supplies averaging 2.25 MMb/d over the upcoming 12-month period. It is interesting to note, seasonal increases in refinery throughputs over the next 6 months provide monthly supply uplifts. These seasonal increases provide the only upside movements to the propane production outlook over the next 12 months.

For the fourth quarter of 2020 the forecast for propane exports has been reduced given the delay in startup of Chinese capacity additions. OPEC+ and Middle East crude oil production increases will improve global propane availability. Chinese incremental demand is met by the U.S. and the Middle East, and the share of supplies from the Middle East to China, increasing as a function of increasing crude oil production rates.  The delays in Chinese demand and the increases in Middle East supplies lead to tempering U.S. exports as compared to the previous trend report. The monthly export rates have been reduced by approximately 0.1 MMb/d for November 2020 through June 2021. U.S. monthly exports are expected to average 1.1 MMb/d through December 2020 and averaged 1.2 MMb/d through June 2021.

Total U.S. propane demand for May was approximately 80,000 b/d higher than expected, estimated by the EIA at 1.98 MMb/d. Total U.S. demand is forecasted to increase going forward on a monthly basis reaching a seasonal peak of 2.58 million b/d in January 2021, nearly on par with the previous trend report. Correspondingly, IHS Markit’s current estimate the June 2020 propane inventory is 76.5 million barrels (38.5 days of forward demand) rising to approximately 95.0 million barrels (44.8 days of forward demand) by September 2020, slightly lower compared to last month’s trend report. PADD II inventory levels for September 2020 are below last year’s level, lower by approximately 4.6 days and continues to highlight a potential supply and logistics issue. PADD III inventory levels have been adjusted lower on a forward days of supply basis for the forecast period, June 2020 through June 2021. The days of forward supply have been reduced on average by 4.4 days. The average days of forward supply for this period is estimated at 31.1 days.

The current Mont Belvieu average daily propane price for July 2020 was approximately 49 cpg, approximately 50% of the WTI crude oil price. The monthly price remained almost unchanged from last month but weakened on a crude oil basis by approximately 5%. Daily Mont Belvieu propane prices continued to track the crude values, but the weaker average propane-to-crude ratio coincided with firming weekly propane production rates.



 Factors Affecting Domestic Inventories

 Domestic propane supply is affected by primarily four factors (Exports, Petrochemical Demand, Crop Drying and Weather).  

  1. Exports - Exports have become one of the largest factors impacting inventories, especially in PADD 3, the Gulf Coast area.  As export terminals continue to be constructed in the Gulf Coast, this factor will play a larger role in overall domestic inventory.
  2. Petrochemical Demand – Since the domestic supply situation is improving with more production coming from the shale regions, petrochemical companies will continue to rely on natural gas liquids (NGLs) as their primary feedstock.
  3. Crop Drying – Agriculture continues to be the largest industry in the US.  Propane plays a critical role in removing moisture from crops to avoid spoilage in storage.  When crops have high moisture content, propane supply is affected significantly over a relatively short period of time.  In the fall of 2013, agriculture in the Midwestern states alone consumed over 325M gallons of propane.  This significant draw on supply did not allow inventories to recover all winter.
  4. Winter Weather – One of the smallest primary inventory sectors is PADD 1, which covers the Northeast and Middle Atlantic areas of the country.  Extended cold weather can have a significant impact on supply availability. Propane continues to be a primary fuel as a heat source in this part of the country.



When discussing prebuy options with our customers, it is our belief that you should sell what you buy and buy what you sell.  Most traders will readily admit that they cannot predict what the market will do.  As a retailer, we believe the same holds true.  When it comes to prebuy positions, you should be evenly hedged.  Prebuys can provide a nice hedge for those customers looking to lock in gallons and pricing for the year.  Please let us know if you are interested in this program.