US propane inventories grew by 600,000 to 42.2 million barrels as of 5/12/17 with the primary gains in the Midwest. Inventory is 32 million below this time last year and 12.1 million below the 5-year average of 54.3 million.
In my opinion, ‘The Story’ is we are still 32M/bbls below the same time last year, or 43%. We added 1M/bbls to our stocks one year ago this week.
Some of the internal numbers still don’t make sense to me. For instance, we saw exports jump back to 1.254M/bpd this week, a gain of 424,000/bpd. That’s one of the largest weekly numbers, ever. Yet domestic demand was listed at just 548,000/bpd, one of the lowest numbers I can recall. This is off from last week’s 700,000/bpd, yet we know petchems were cracking over 400,000/bpd this past week.
That math just does not add up, and I oftentimes feel the domestic demand number is just the last thing that gets plugged in and it’s listed as whatever it needs to be to make the rest of the numbers work…sort of like Dark Matter has to exist for the standard model of particle physics to work, so we’ll just say it’s out there, even though we cannot really prove its existence…but that is a pet interest of mine and a topic for…well, probably never on this blog. We can talk about it on the phone, if you’d like.
Back to reality…
Crude stocks drew 2.5M/bbls, and I continue to be interested in this data:
US COMMERCIAL CRUDE STOCKS continue to draw down earlier than normal this year with the surplus over 2016 now down to +11 million bbl pic.twitter.com/ZhlTks4nsK
— John Kemp (@JKempEnergy) May 17, 2017
We continue to cut into the 2016 crude stock overhang, and at some point over the next three months, we may move the other direction. That said, crude stocks were at record highs in 2016, which was the impetus for OPEC installing their production cuts.
On that front, Saudi Arabia, Russia and Iraq have publicly stated they will do whatever it takes to continue to try and bring balance to the global crude supplies, even extending production cuts to next March. This jawboning helped lift crude oil off its lows from the mid $45/bbl range to where it is now trading, over $49/bbl.
OPEC meets in Vienna on May 25th and all indications are pointing to them extending their production cuts, at a minimum. If they make deeper cuts, that could cause the markets to firm up even more. If they extend the present cuts, I still sense some market uncertainty, or rather, I don’t think the market is certain to enter into another bull run, even though it has risen over $4/bbl over the past 11 days.
Thus far, their compliance has been historically exceptional, based on previous production cut attempts:
— JEFAIN ALHAJRI🛢 (@JRJ_ALHAJRI) May 17, 2017
Here are additional propane numbers pursuant to this week’s inventory report.
Regional Inventories: Midwest up 700,000 to 13.3 million; Gulf up 200,000 to 24.5 million; East down 300,000 to 2.6 million; and West up 100,000 at 1.8 million.
Historical Averages: Midwest is 5.9 million below last year and 2.2 million below the 5-year average of 15.5 million. Gulf Coast inventory is 24.6 million below last year and 9.4 million below the 5-year average of 33.9 million. East Coast is 1.1 million below last year and is 400,000 below the 5-year average of 3 million.
Total propane imports were down 8,000 to 81,000 bpd. East Coast down 5,000 to 20,000; Midwest down 13,000 to 32,000; Gulf unchanged at 0 bpd and West up 10,000 to 30,000.
Propane exports continue to climb, jumping this week by 424,000 to 1,254,000 bpd.
Additional Inventory Numbers:
Crude: -2.5 mm to 1,208.8
Total Motor Gas: -0.4 mm to 240.7
Distillates: -1.9mm to 146.8