Propane News

Weekly Inventory Results

05/10/18-U.S. propane/propylene stocks increased by 2.3 million barrels last week to 38.7 million barrels as of May 4, 2018, 12.6 million barrels (24.5%) lower than the five-year average inventory level for this same time of year. Gulf Coast, Midwest, and Rocky Mountain/West Coast inventories increased by 1.1 million barrels, 0.9 million barrels, and 0.3 million barrels, respectively, while East Coast inventories increased slightly, remaining virtually unchanged. Propylene non-fuel-use inventories represented 7.6% of total propane/propylene inventories.

NPGA Propane Inventory Report Summary

April 2018

Total US inventory remained low into April due to higher than expected exports. Mont Belvieu reacted to slow pace of inventory and days of supply growth in April with a mid-month increase in the ratio of propane to crude from the low 50% range to nearly 60% later in the month. Although US exports are high in April, production growth should allow days of disposition to increase at a faster pace than last year. IHS expects lower exports combined with higher supply due to a recovery in US crude production to lead to better stocked inventories in the winter.

On a PADD level, the industry needs to closely monitor PADD 2 supply/demand dynamics over the next several months. Weak Conway-Mont Belvieu price spreads may incentivize low motivation to hold inventory in PADD 2. It appears that PADD 2 inventory over the past few months has not grown at typical season levels due to the spread and it is expected that end of April inventory's will be extremely low.


 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.