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DIGITAL EDITION
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THIS WEEK'S TOPIC:
PROPANE INVENTORY
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What low Canadian inventory tells us about product flow |
The latest data from the National Energy Board (NEB) of Canada shows propane inventory posting a new five-year low for June.
Click to enlarge. Image: Cost Management Solutions
June inventory was at 5.155 million barrels. Last year inventory was at 6.571 million barrels in June, and the five-year average for June has been 7.075 million barrels.
Click to enlarge. Image: Cost Management Solutions
The tables above show the breakdown by region. The red numbers highlight the latest data. Total inventory is 27 percent below the five-year average. West inventory at 3.682 million barrels is 12 percent below the five-year average. East inventory at 1.474 million barrels is 49 percent below the five-year average.
Canadian producers are exporting more of their production and storing less. The latest export data is through May. Through May 2019, producers exported 2.262 million barrels more to the United States than through May last year. In addition, producers exported 1.8 million barrels more to non-U.S. destinations.
Prior to 2017, all Canadian exports were to the United States. But in March 2017, Canadians started bypassing the U.S. market with rail shipments directly to Mexico. As of May, the Canadians have another mode of transportation available to them. The waterborne export facility on the Canadian west coast began shipping product, which will open up additional markets. We should start seeing that reflected in the export numbers in the coming months.
There is no doubt that Canadian producers want to improve their netback on propane. Shipping to the U.S. Midwest is fairly brutal for them with Edmonton (western Canada) averaging just 16.8576 cents this month. Edmonton traded down to 12.125 cents on July 9 but had moved to 21.125 cents by July 25. At the beginning of the month, the price spread between Edmonton and Conway was 21.5 cents. By July 25, the spread had dropped to 13.5 cents. The spread may be coming together due to the impacts of the waterborne export option.
It should be interesting to watch how Canadian exports move in the coming months and how that affects both inventory levels and price differential with the U.S. market. If less product is shipped to the U.S. Midwest, it could apply upward pressure to Conway propane prices.
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WHAT IS COST MANAGEMENT SOLUTIONS?
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The Propane Price Insider is an email service that provides:
- Three daily price Flash Wires
- Periodic option quotes
- Wednesday inventory data updates around 11 a.m. ET
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Evening report with executive summary, weather maps and complete review of energy prices that are based on propane's Btu equivalent
For a free 10-day trial subscription by email, sign up online here or call 888-441-3338.
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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.
Contact us today to see if you can benefit from having the Energy Price Watchdog working for you.
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Many retailers simply don't have time to analyze the large amounts of data to make an informed purchasing decision.
We offer:
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Detailed market recommendations on hedge and pre-buy entry points
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Prompt market execution of hedging strategies
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Supply cost analysis and recommendation as to effective hedging strategies
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Large volume consideration when we place your hedges
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GOT STORY IDEAS? Email Brian Richesson, Editor in Chief
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