inventory

Propane Builds 900,000/bbls

Propane built 900,000/bbls for the week ending 10/6, that according to this week’s EIA report released on Thursday.

Exports were off 112,000/bpd, production was up 25,000/bpd and demand was off 34,000/bpd. Adding all of that up gets you to roughly 1.2M/bbls of additional product this week than last week’s nearly 400,000/bbl draw, so the EIA just calls that a 900,000/bbl build.

National inventories stand at 78.9M/bbls, and this is the first build in three weeks. One year ago this week, inventories saw their first draw of 2016 of 100,000/bbls, and national stockpiles stood at 103.9M/bbls.

The United States is experiencing the second warmest October on record through the first 11 days of the month, which is having an obvious impact on propane demand. Grain drying has been a non-factor to date and the prospects for much of an impact on that front are not strong.

The remainder of October looks to continue the warm spell, so it would not surprise me to see propane inventory reports be in the +500,000/bbl to -500,000/bbl range the rest of this month. That said, I remain convinced we have seen the annual high point for inventories, reached four weeks ago when they hit 82.2M/bbls for the week ending September 9th.

I have had more than a few clients asking me about the outlook for November weather in recent days. I wrote a bit about that yesterday in this link, as a lot of folks are concerned that since October is so warm, will that mean November will also be warmer than average?

I am not a meteorologist, but thankfully I have access to a number of them.In their morning briefing, MDA ran a comparison of the 10 warmest Octobers on record to that of the following November.  This, from their notes:

“From a GWHDD (Gas Weighted Heating Degree Days) standpoint, October carries very little statistical significance as to what happens in November, as all data going back to 1950 only carry a +0.17 correlation between months. Among the top-10 warm Octobers came two Novembers in the top-10 for warmest but only five being warmer than the 30 year normal per GWHDD measures.”

While it’s good to read that a warm October doesn’t have a statistical correlation to a warm November, it’s all about what is driving the weather and climate for that given year. The current influence of the Pacific Jet Stream is a dominant factor in our October warmth, and we need some type of influence to cause that warm conveyor belt to change course.  Here is the last line from MDA’s morning briefing:

“Going forward we will be looking for a catalyst for change (i.e. typhoons, MJO, etc…), but a lack of clarity in this regard and still warm signals like west-Pacific SSTs and the +AMO keep the current November forecast leaning warmer vs the 30 year normal.”

If you missed yesterday’s Propane Buzz, here is what they are calling for November (and also December)

MDANOVDEC

Here is what BAMWx.com had for November as of September 29th, and they remain committed to this look while also acknowledging the concern of the Pacific Jet:

BAMNov.

Here are some market related tweets following the EIA’s

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Jon Miller
Marketing Representative for NGL Supply Wholesale in Tulsa Oklahoma. Follow me on twitter @PropaneBuzz

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