The U.S. propane market is abuzz as the massive inventory drawdown in January sparked a rally in Mont Belvieu prices. As shown in the chart below, we estimate that total U.S. propane stocks dropped by 20.1 MMbbl in January 2024 (blue striped bar in middle column), which was well above the 8 MMbbl decline in January 2023 (red bar) and the 11.3 MMbbl 5-year average (green bar) draw for the month. But it hasn’t been just January, as the inventory cushion began shrinking in October and we project that stocks will decline by 54.8 MMbbl (blue striped bar to far right) this winter season, compared to only 26.2 MMbbl during the 2022-23 winter season (red bar) and the 5-year average of 38.2 MMbbl (green bar).
Featured Articles
- Analyst Insight
Warm Winter Unable To Offset Record High Propane Exports
Cold weather wasn’t the cause for the above-average stock draw in February as total U.S. heating degree days (HDDs) reported by the National Oceanic and Atmospheric Administration (NOAA) were 12% below the 10-year average for the month and slightly below last year.
- Blog
Cold as Ice - Frigid Weather Blasting into Propane Country. Markets Brace for Supply Disruptions
A blast of Arctic air plunges the Midwest and Northeast into deep freeze. Already-low propane inventories result in supply shortages in local markets. Propane transport trucks move product hundreds of miles from storage hubs to replenish regional terminals as markets scramble to meet surging propane demand. Are we talking about the nightmarish polar vortex winter of 2013-14, when regional propane inventories were sucked down dangerously low and Conway, KS, propane prices skyrocketed to almost $5.00/gal? No. We are talking about now. This is a description of what is happening today in U.S. propane country –– that belt of northern states that depend heavily on propane for heating. But this is not 2013-14. Things have changed. So in today’s blog we’ll explore how the latest polar vortex could be quite different than that weather-driven crisis seven years ago.
- Blog
It's All Over Now - U.S. Propane Prices Spike, Then Ricochet. What's Next in 2021?
Things move fast in today’s propane market. Two weeks ago, Mont Belvieu propane was going for almost 95 cents/gal, up 86% from the mid-November price of only 51 c/gal. Midcontinent propane assessed in Conway, KS, spiked even higher, doubling over the same time frame to more than a dollar per gallon. But last week some air came out of the balloon, with Mont Belvieu and Conway prices pulling back to the low 80s. That didn’t last long either. This week, Mont Belvieu is back up to the high 80s c/gal. What gives? Is the market simply being bounced around by vacillating weather forecasts? Or is there more to it than that? Could it be that we are seeing symptoms of an export-driven transformation that is making propane markets behave quite different than they have in the past? Today, we’ll consider these questions and where the propane market may be headed in 2021 and beyond.
