Propane News

Weekly Inventory Results

12/28/18-U.S. propane/propylene stocks decreased by 1.0 million barrels last week to 72.2 million barrels as of December 21, 2018, 4.6 million barrels (6.0%) lower than the five-year (2013-2017) average inventory level for this same time of year. Midwest, Gulf Coast, and Rocky Mountain/West Coast inventories decreased by 0.6 million barrels, 0.3 million barrels, and 0.1 million barrels, respectively. East Coast inventories increased slightly, remaining virtually unchanged. Propylene non-fuel-use inventories represented 6.7% of total propane/propylene inventories.

NPGA Propane Inventory Report Summary

November 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 fell in September and October after experiencing record highs during the summer. This allowed inventory to grow in PADD 3 as the weakened spread between naphtha and propane lowered the incentive for PDH units to operate at high utilization rates in Asia. In November, the sharp drop in crude prices allow Asian PDH margins to recover and exports to Asia increase. In spite of the higher exports in November, the drop in export in September and October allowed inventory and days of disposition to recover and thus has lowered the risk of reaching critical days of disposition in early 2019.  PADD 3 inventory saw continued strong growth due primarily to high levels of associated gas plant production due to record high crude and gas production. However, the higher exports overcame the growth in production and inventory fell.


 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.