What drives propane inventory levels?
August 3, 2021 By Mark Rachal
Mark Rachal, director of research and publications for Cost Management Solutions, addresses the fundamental drivers of propane inventory levels.
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Mark Rachal, director of research and publications for Cost Management Solutions, addresses the fundamental drivers of propane inventory levels.
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Propane prices are mostly influenced by crude’s price, not natural gas’s price. But the vast majority of propane supply comes from natural gas processing.
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The relatively light build for the week ending July 9 marked the fifth week in a row of inventory building at a below-average pace.
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Propane production needs to stabilize or grow to change the pricing environment so propane prices fall again, says Mark Rachal of Cost Management Solutions.
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Not only does EIA data show propane inventory near five-year lows, but prices at Mont Belvieu topped the $1-a-gallon mark for the first time since 2018.
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The price change was the largest within-season increase in residential propane prices since the 2013-14 season.
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Retailers that evaluate market conditions and establish buying criteria based on that evaluation may find that they captured the lowest price of the year.
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Cost Management Solutions’ Mark Rachal discusses the heating season of 2020-21, highlighting factors that led to upward pressure on propane pricing.
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Propane retailers should use all of the market knowledge and risk management tools available to lower supply cost, says Mark Rachal of CMS.
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Two propane supply trends could warrant some caution about buying propane for next winter, says Mark Rachal of Cost Management Solutions.
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