U.S. propane production from natural gas processing has doubled over the past five years, but domestic demand has hardly moved the needle. So the only way the propane market has balanced is through exports, and it is no overstatement to say that the ship has really come in for U.S. propane exporters. All those exports have also helped support the U.S. propane market, holding inventories down to about where they were last year, and supporting propane prices at about 43% of crude oil versus 35% this time last August. But it looks like the market may be shifting, possibly pulling some of the export safety net out from under the market. That’s because the economics from exports are looking pretty dismal –– so bad, in fact, that cargos are being cancelled right and left. Today, we examine the market for propane exports, why the market is changing now, and what it means for propane over the next few months.
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