Propane prices driven down by inventory build
July 8, 2019 By Mark Rachal
Weekly estimates from the Energy Information Administration show a robust U.S. propane export market. Exports have been above…
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Weekly estimates from the Energy Information Administration show a robust U.S. propane export market. Exports have been above…
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Petrochemical companies have been choosing ethane over propane. See what the propane demand decrease means for domestic demand and prices.
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Combined domestic demand and export volumes are not keeping up with increases in propane production. This results in building inventory and falling prices.
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Total fuel-use propane production from January 2018 to this January increased. Compared with 2017, supply growth is very strong this year.
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High rates of propane production, high inventory levels and relatively soft growth in propane exports have created a bearish fundamental situation for propane that could continue beyond winter.
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U.S. propane production surged at the end of 2018, which contributed to the recent weakness in propane prices and likely capped upside price potential.
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A Conference Board of Canada report expects 20 percent growth in propane production from 2017-2025, which will positively effect the country’s economy.
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Crude oil production is expected to increase in 2019. The growth in will lead to increased gas plant production and more propane production.
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U.S. propane production is much higher than domestic propane demand, leaving propane exports to play the role of balancing U.S. supply with demand.
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Major producers, including OPEC countries and Russia, agreed to extend the production quotas implemented in January through the end of 2018.
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