Propane inventory back over 100 million barrels

Last Wednesday, the Energy Information Administration reported that U.S. propane inventory increased 971,000 barrels to 100.641 million barrels. The previous week, inventory surprisingly declined by 1.024 million barrels, dropping it below the 100-million-barrel mark.

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At 100.641 million barrels, inventory is very close to its five-year high for this point in the year. Total U.S. propane/propylene inventory is 21.919 million barrels, or 27.8 percent, higher than last year. Inventory was at just 78.722 million barrels at the end of September last year.

Last year, inventory peaked at 84.528 million barrels. The current inventory position is already 16.113 million barrels above that point. Some analysts believe inventory could reach 110 million barrels this year. Just the 21.919-million-barrel margin compared to last year could supply more than 15 days of last winter’s average domestic supply needs.

Regionally, inventory on the U.S. Gulf Coast is also near its five-year high.

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Gulf Coast inventory is at 61.119 million barrels. That is 21.621 million barrels, or 54.7 percent, higher than last year. Obviously, this is where the inventory overhang from last year exists.

Midwest inventory is much closer to normal. Midwest inventory is now 272,000 barrels less than it was last year, or about 1 percent, at its current 27.464 million barrels.

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In order for inventory overhang to be cleaned up, it is going to take a sustained period of high propane export and domestic demand volumes. Where there have been periods of strong demand in one or the other area, sustained combined demand for both exports and domestic needs have not occurred. With exports running about 250,000 barrels per day less than current export capacity, it doesn’t look like there is much potential of combined strong demand anytime soon.

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