Propane News

Weekly Inventory Results

2/27/19-U.S. propane/propylene stocks decreased by 1.2 million barrels last week to 53.4 million barrels as of February 22, 2019, 4.5 million barrels (9.1%) greater than the five-year (2014-2018) average inventory levels for this same time of year. Gulf Coast, Midwest, and Rocky Mountain/West Coast inventories decreased by 0.8 million barrels, 0.5 million barrels, and 0.2 million barrels, respectively, while East Coast inventories increased by 0.4 million barrels. Propylene non-fuel-use inventories represented 12.4% of total propane/propylene inventories.

NPGA Propane Inventory Report Summary

February 2019

U.S. days of disposition broadly elevated, PADD 2 may still be susceptible to any late winter events

As February comes to a close, EIA weekly stock estimates and our monthly forecasts suggest that the U.S. is generally well supplied with propane on a days of disposition basis. February ending days of disposition is believed to be in line with levels seen in 2017 and well above the levels of last year and those at the start of 2014. Increasing production will allow stocks to be rebuilt quickly but must contend with expected continued increases in exports. Looking forward through 2019, we expect the U.S. to be generally well supplied, but not to the extent seen in 2015 and 2016 where new supply growth was trapped in the U.S. as export terminals were undergoing construction and coming to completion.

PADD 2, on the other hand, has seen its February days of disposition estimate fall below levels seen in 2017 and approach the levels seen last year. The Conway propane price and its ratio to WTI have both been rising over the end of February in response. While we are currently forecasting a rapid and sustained recovery in days of disposition for PADD 2, due to the increases in production we have seen, it remains susceptible to reaching critical days of disposition in the event of a persistent or deep winter weather event through the remainder of the season.


 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.