Propane News

Weekly Inventory Results

8/6/19-U.S. propane/propylene stocks increased by 2.9 million barrels last week to 83.3 million barrels as of August 2, 2019, 6.8 million barrels (8.8%) greater than the five-year (2014-2018) average inventory levels for this same time of year. Gulf Coast, Midwest, and East Coast inventories increased by 2.0 million barrels, 0.5 million barrels, and 0.4 million barrels, respectively, while Rocky Mountain/West Coast inventories increased slightly, remaining virtually unchanged. Propylene non-fuel-use inventories represented 4.9% of total propane/propylene inventories.

NPGA Propane Inventory Report Summary

July 2019

The July 2019 trend report notes higher propane supplies and higher demand as compared to the June 2019 trend report.

US primary inventory levels for the current period are accelerating as compared to history and are expected to stay healthy and above 2018 levels for total US, PADD II and PADD III. PADD I and PADD IV and V primary inventory levels are comparable to 2018. Total US primary inventories are well above maximum inventory levels recorded during the same periods for 2014 through 2018 (see the graph in the July Snapshot).

The current July trend report notes higher propane supplies and higher demand as compared to last month’s trend report. Increasing supplies were matched with increasing demand via exports to balance the US market. The role of the US in the global propane market continues to strengthen. Propane price spreads between Mont Belvieu and other international propane price benchmarks, namely Northwest Europe and Asia, have widened and highlights increasing availability of US propane for export. The price spread between Mont Belvieu and Northwest Europe has increased from around $90 per metric ton in January 2019 to around $131 per metric ton in June 2019, monthly average of daily price bases. At the same time the price spread between Mont Belvieu and Asia has increased from around $108 per metric ton in January to around $167 per metric ton in June. For the month of April 2019, the price spread reached a short-term maximum of $123 and $213 per metric ton in Northwest Europe and Asia, respectively

Continued growth in propane supply is expected and will be driven by oil and natural gas upstream drilling activity, with the major supply area being the Permian Basin and the Appalachia region. Onshore pipeline capacity additions and export terminal capacity additions supporting these producing areas will translate into incremental exports of propane internationally.

Exports are expected to grow as Mariner East 2 transports incremental propane to the US East Coast. US Gulf Coast terminal capacity additions are in the works by several companies including Enterprise Products, Targa Resources, and Energy Transfer. Other US midstream companies are also considering export terminal capacity additions. Enterprise Products export terminal capacity expansion is expected to come on in phases with the first phase operational in the coming months and the balance by late 2020, and both Targa Resources and Energy Transfer export terminal capacity expansions are expected to be operational by the second half of 2020.


 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.