Propane Inventories Increase on Weaker Demand

Propane inventories reversed three weeks of falls to post a surprise build last week. It follows warmer temperatures and weaker demand. (image: heintzspropane.com)

After falling for three consecutive weeks, propane inventories have posted another build on milder temperatures and weaker demand. But the average residential price of propane gas added almost one cent a gallon in the last week.

Total US reserve propane stocks grew by 400,000 barrels in the last week to close at 59.8 million barrels – the equivalent of 50.4 days’ supply. At the same time last year there were 65.3 million barrels in storage – the equivalent of 65 days’ supply last year’s lower rate of consumption.

The inventory decrease is the first in a month. Reserve stocks have been falling as colder temperatures start to bite and homeowners turn up their heating systems.

But milder temperatures in many areas last week has cut into demand, allowing inventories to recover slightly.

Despite the 400,000 barrel increase, total propane inventories are still nearly six million barrels below last year’s levels and daily usage has increased. This reflects strong overseas demand for propane and a chilly US autumn, which saw unseasonable snow storms in some parts of the country.

The Midwest region posted the biggest build last week, with inventories adding 400,000 barrels of new stock. The Gulf Coast region added 200,000 barrels but this was offset by a 100,000 draw on the East Coast and a slight drop in stocks in the Rocky Mountain/West Coast region.

Propylene non-fuel use inventories of propane, which are used to manufacture plastics, made up 7.3 percent of total propane inventories.

Despite the increase in reserve propane stocks, the average residential price per gallon of propane gained slightly in the last week, adding less than a cent. Prices increased across all regions.

Figures released yesterday by the US Energy Information Administration show residential propane prices are now 27 cents higher than they were at the same time last year. The EIA predicts prices will be 7 percent higher than they were last winter.