Department of Energy Water Heater Final Rule

On December 26, 2024, the Department of Energy released its Final Rule: Energy Conservation Program: Energy Conservation Standards for Consumer Gas-fired Instantaneous Water Heaters. The rule would deprive consumers of energy choice, and would eliminate a product class of non-condensing tankless water heaters from the market. NPGA, along with coalition partners, have been engaged with this rule continuously, and commented on multiple proposals, and continuously sought meetings with the Department of Energy and other Federal agencies. NPGA was successful in delaying this rule for months, but DOE persisted in published a rule in the waning days of the administration. NPGA has vigorously challenged all DOE actions aimed at eliminating non-condensing appliances, including filing a lawsuit in Federal Court. NPGA and its coalition are currently examining options in response to its release. For further information, please contact Vice President of Regulatory and Industry Affairs Benjamin Nussdorf.

Inventory 1/8/2025

Propane down despite inventory draw
The EIA reported U.S. propane inventories declined 2.455 million
barrels for the week ending January 3. Industry analysts were
expecting a 2.78-million-barrel draw. Over the last five years inventory
has declined 1.967 million barrels during week 53/1 of the year.

Propane production was down 23,000 bpd to 2.670 million bpd.
Propane imports were down 12,000 bpd to 134,000 bpd. Combined
propane supply was down 35,000 bpd. Domestic propane demand was
up 607,000 bpd to 1.436 million bpd. Propane exports were down
370,000 bpd to 1.719 million bpd. Combined demand was up 237,000
bpd. In total it was a negative 272,000 bpd impact on U.S. propane
supply resulting in a 351,000 bpd draw on inventory compared to a
79,000 bpd draw the previous week.

The inventory draw was in line with expectation but larger than
average for the week reported. Inventories remain above last year and
the five-year average.

Crude turns lower
Crude started the day moving higher hitting $75.29, just 19¢ below the 200-day moving price average. A couple of things seemed to turn crude lower. First was a light draw on crude inventories but very large builds of better than 6 million barrels each for gasoline and distillate inventories.

Perhaps more impactful was strong dollar and a report that President-elect Trump is considering declaring a national economic emergency so he can provide legal grounds for universal tariffs. Ultimately WTI closed at $73.32 which put it below its rising 5-day moving price average. It was the first close below the 5-day since December 27.

Inventory 1/2/25

Propane up despite light draw
The EIA reported U.S. propane inventories declined 552,000 barrels for
the week ending December 27. Industry analysts were expecting a 3.23
million-barrel draw. Over the last five years inventory has declined
3.096 million barrels during week 52 of the year.

Propane production was up 16,000 bpd to 2.693 million bpd. Propane
imports were up 21,000 bpd to 146,000 bpd. Combined propane supply
was up 37,000 bpd. Domestic propane demand was down 905,000 bpd
to 829,000 bpd. Propane exports were up 378,000 bpd to 2.089 million
bpd. Combined demand was down 527,000 bpd. In total it was a
positive 564,000 bpd impact on U.S. propane supply resulting in a
79,000 bpd draw on inventory compared to a 643,000 bpd draw the
previous week.

Despite the light inventory draw propane prices surged higher helped
by a rise in crude’s price and cold weather outlooks for early January.
MB ETR gained 3¢ and Conway 4.75¢. Midwest inventories were down
733,000 barrels while inventories on the Gulf Coast were up 16,000 barrels.

Crude continues China rally
Crude continued its strong rally that started on reports that China is going take measures to stimulate its economic activity this year. Recently China has been accounting for about two-thirds of global crude demand growth which is the reason news on China’s economy has such an oversized impact on crude pricing.

The EIA reported a relatively light 1.178 million barrel draw in crude inventories, but that was offset by large builds in refined fuels inventories. Gasoline inventories increased 7.717 million barrels and distillate inventories increased 6.406 million barrels. Those builds far exceed expectations.