Propane Builds; Cold 45 Day Outlook on Tap

Propane inventories built 1.3M/bbls, according to the EIA’s inventory report released today for the week ending December 1st, 2017.

Inventories now stand at 74.5M/bbls and 24.8M/bbls below where we were one year ago at this time.

We saw a week over week increase in domestic demand from November 23rd to December 1st, despite the warmer temps to end November. However, exports went into the dumpster, dropping to 681,000/bpd from 1.127M/bbls a week ago.

Below normal temperatures are on the way for the foreseeable future, as I will share with you shortly, but exports are just such an enormous swing factor for our industry. The Mt Belvieu OPIS average for November 27th was $1.0187/gal, the highest daily average in over two years. Prices have fallen back a bit since then, and daily averages have been at least $.9700/cpg since early November. This likely had an impact on spot cargo cancellations which led to the soft export numbers. This, combined with this week’s warmth, would tend to make one think next week’s report will be in the same range and the one we just witnessed.

That said, some early indications from a waterborne export report we follow paints a different picture, in that exports could be very strong this week, which will show up in next week’s report.

WEATHER: The outlook for colder than normal temperatures for the eastern half of the nation remains positive.

Here is 45-day outlook for the Canadian Model, which puts us out to around January the 20th:

Here is a look at the 15-30 day render from the analogs that are most like present atmospheric conditions (both of these Maps come from BAMWx.com)

It does look like we could see a warm up period before December ends, which would not be a shock. As Michael Clark from BAMWx.com said in a recent video, it’s very difficult for temperatures to remain 8 to 10 degrees below normal for three or four straight weeks.

Still, look at this animation and note how the cold stays in a similar geographic position over the east and Ohio Valley:

Basically, Minnesota, Wisconsin, Michigan, Indiana, Ohio, Pennsylvania and the entire Northeastern Corridor are at or below normal for the duration of this animation, which spans December 8th through the 21st at higher altitudes, which will of course equate to colder than normal temps at 2-meters, where we live. That is, IF this verifies.

Here is a 10-day run of the European at higher altitudes:

Also, MDA releases their 60-day outlooks each Wednesday morning. They have not changed anything from their January outlook I shared last week, and take a look at their preliminary February thoughts on the right:

Here is a tweet that I found to be very interesting, given my amateur interest in sunspot cycles and solar maximum and minimum periods and the effects the sun has on our planet. While I am not an outright ‘climate denier’, to borrow a popular term from the nomenclature of our times, I still believe the sun has the ultimate veto power over anything mankind can throw at the planet, aside from a post-apocalyptic nuclear winter scenario.

The sun experiences regular cycles where, to put it in layman’s terms, it runs hotter or ‘cooler’ at times. When it runs hotter and peaks within an 11 year time frame, this is a solar maximum cycle. During these cycles, there are more sunspots, which are hot spots, on the sun, and our temperatures here on earth tend to risk warmer than normal. When there are fewer sunspots, the sun runs ‘cooler’ and we tend to have cooler downstream effects here on earth during these ‘solar minimum’ periods.

With that in mind, here is a tweet from Michael Clark:

If this historical trend verifies for the time period suggested, it’s not a bad time to be in the biz.

If you want to learn more about solar minimum and maximum periods, click on this link. That link takes you to an explanation of a period known as the Maunder Minimum, which was a time frame where the earth experienced a prolonged sunspot minimum. This was between 1645 and 1715, a period that also coincided with something known as ‘The Little Ice Age’.

Here is one final ‘Did You Know’ to end this write up. Antonio Stradivari is known the world over for making the most coveted violins of all time, and a Stradivari built over 1,100 violas, guitars, cellos and violins in his life, many in the late 17th century…or during the Maunder Minimum period. The reason these instruments are coveted is for their tonal qualities, deemed to be without peer in all the musical world.

There is a belief among some scientists that the wood which existed during this time period, or rather, it’s growth, was impacted by the low solar conditions it ‘grew up’ in…affecting the rate of growth of the wood which may have also impacted the acoustical quality of the resulting instrumentation constructed during those times.

Antonio Stradivari was born one year before the start of the Maunder Minimum.

Be sure to drop that knowledge around the dinner table tonight!

Jon Miller

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

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