Propane News

Weekly Inventory Results

11/7/18-U.S. propane/propylene stocks increased by 1.5 million barrels last week to 84.5 million barrels as of November 2, 2018, about equal to the five-year (2013-2017) average inventory level for this same time of year. Gulf Coast inventories increased by 1.9 million barrels. Rocky Mountain/West Coast inventories decreased by 0.2 million barrels, and East Coast and Midwest inventories each decreased by 0.1 million barrels. Propylene non-fuel-use inventories represented 4.4% of total propane/propylene inventories.

NPGA Propane Inventory Report Summary

October 2018

Very low days of disposition entering the winter. Risk of critical days of disposition this winter remains high primarily in PADD 3

US exports continue to remain high to Asia and the risk for low days of disposition for the US as a whole remains high. The primary reason behind the high exports are tepid Middle East exports to Asia and high naphtha to propane spreads incentivizing PDH economics in China. The high exports have stalled the required growth in PADD 3 inventory necessary to replenish inventory in the US to safe days of disposition. However, in October, PADD 3 inventory saw strong growth due primarily to high levels of associated gas plant production due to record high crude and gas production. This led to days of disposition for the US as a whole to increase in September and led to some weakness in propane to WTI price ratios.


 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.