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Sharp fall in U.S. and Gulf Coast propane inventory
Cost Management Solutions    
Cost Management Solutions


In recent weeks, we’ve monitored the sharp decline in U.S. propane inventory. On Feb. 18, the Energy Information Administration (EIA) released its Weekly Petroleum Status Report for the week ending Feb. 12.

The data revealed another above-average draw on U.S. propane inventory. Over four weeks, total U.S. propane inventory declined 19.485 million barrels, which is more than double the five-year-average draw over the same four-week period.

In this issue of Trader’s Corner, we are going to look more specifically at Gulf Coast propane inventory. In its last report, EIA showed Gulf Coast propane inventory down 3.398 million barrels, comprising the bulk of the total 4.340-million-barrel draw on U.S. inventory.

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From the first week of the year, Gulf Coast propane inventory has fallen 14.773 million barrels. The five-year-average draw over the same time frame is 5.732 million barrels. Last year, the draw over this time span was only 4.334 million barrels.

The inventory draw points to a significant fundamental change in either supply or demand. The fundamental change was a significant increase in Gulf Coast export capacity. Major expansions in export capacity were completed at the end of last year, and their effects are apparent.

Throughout last year, Gulf Coast propane inventory set all-time highs. If the current rate of decline continues, that trend is likely to end sometime this spring.
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If retailers are looking only at total U.S. and Gulf Coast inventory levels, they would come away with a bearish view of the market because both remain at record highs for this time of year. However, more important than the current inventory level are the trends in inventory declines. Those trends point to the direction fundamentals are heading. Fundamentals are heading to a much tighter supply situation where the ability to handle production and move excess propane via export has already arrived.

As propane retailers, we need to get ahead of the curve. Propane prices both now and for the future remain at favorable levels. However, inventory trends are suggesting a definite shift to upward price pressure going forward.


Propane retailers have the opportunity to get three years ahead of rising prices and potentially set themselves up for some of the most profitable and rewarding years ever. The opportunity for retailers to secure their customer base and keep it happy with desirable propane prices for years is now possible.

In April, Cost Management Solutions will conduct a hedging workshop that will show retailers how to take advantage of current low prices and the shifting fundamental landscape to put themselves in secure, profitable and rewarding positions. Please consider attending the event, which will take place prior to NPGA’s Southeastern Convention & International Propane Expo.



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Cost Management Solutions LLC (CMS) is a firm dedicated to the analysis of the energy markets for the propane marketplace. Since we are not a supplier of propane, you can be assured our focus is to provide an unbiased analysis.

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