Propane Inventory Update

You have a big job on your hands as the overseer of your company’s annual propane purchases. One of our jobs is to help you understand what’s happening here in the United States (and around the world) that could impact propane supplies and wholesale propane prices. The following is an excerpt from the National Propane Gas Association’s recent propane inventory report. We’ll share this up-to-date information with you in each issue of The Pipeline. As always, if you have any questions, please feel free to give any of us a call.
 
September 2016 data shows continued length in domestic propane inventory with weekly estimates expected to outpace values seen in September 2015 and potentially setting a record for the month.  The primary reason behind the growth in weekly inventory is a dramatic decline in propane exports due to low arbitrage economics to Asia.

Over the next several months, arbitrage economics to Asia are expected to change as we approach the winter months, leading to a recovery in export volumes.  While this will allow some reduction in inventory, all PADD districts are expected to see relatively healthy volumes of stocks.

Residential and commercial demand for the early winter months have been adjusted downward in the latest forecast due to the release of the first NOAA weather forecast which showed heating degree day forecasts representing an average to slightly mild winter.  This is in sharp contrast to the NOAA’s summer forecast of a shift from the warm El Nino patterns seen during the winter of 2015-2016 to cooler La Nina weather patterns.  In spite of this change in weather forecasts, a pause in supply growth from gas plants is expected to keep inventory in range with values seen in the winter of 2015.