Propane News

Weekly Inventory Results

10/18/18-U.S. propane/propylene stocks increased by 2.0 million barrels last week to 82.3 million barrels as of October 12, 2018, 4.3 million barrels (4.9%) lower than the five-year (2013-2017) average inventory level for this same time of year. Gulf Coast inventories increased by 2.4 million barrels, and Rocky Mountain/West Coast and Midwest inventories each increased by 0.1 million barrels. East Coast inventories decreased by 0.5 million barrels. Propylene non-fuel-use inventories represented 2.9% of total propane/propylene inventories.

NPGA Propane Inventory Report Summary

September 2018

Very low days of disposition exiting the summer; risk of critical days of disposition this winter remains high.

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.

Because of the record high summer exports of propane, the trend report forecasts shows that inventory on a days of disposition basis is not growing at an adequate rate to replenish stocks in PADD 3 in time for the winter months.  It should be noted that this is primarily a PADD 3 phenomenon and that PADD 1 and PADD 2 inventories appear to be well stocked at the end of September.


 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.