Propane Inventory: Halfway into the Winter Drawdowns and Still Healthy

A salt cavern, the typical storage site for a petroleum product like propane. (image:

The demand for propane is highly seasonal, with customers burning most of the gas for home heating during the chilly winter months. However, propane production is a steady business, and the industry cannot increase output to meet the surge in demand.

So the national propane supply follows a predictable peaks-and-valleys cycle each year: Build up the inventory in the summer, draw down the inventory in the winter. Plotted on a graph, the fluctuations in the propane supply looks like the classic sine wave from high school trigonometry.

Just past the mid-point of the heating season, the country is in the midst of the winter drawdowns. The total U.S. inventory dropped 2 million barrels in the first week of the year, to 50.6 million barrels, according to the latest stats from the Energy Information Administration (EIA). That puts the national reserves within their average range, though skimming close to the bottom limit, after six straight weeks of stock withdrawals.

The Gulf Coast saw the biggest declines, with a 1.7 million barrel drop. The East Coast burned through 500,000 barrels. Meantime, the Midwest added 100,000 barrels to the stocks, and the West was up slightly, too.

Judging by the history books, the supply starts to rebound by mid-March, and begin its steady build-up again. So expect the drawdowns to continue till St. Patrick’s Day.

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