Propane inventories failed to show a build this week, with the EIA reporting ‘flat’ activity for the week ending 4/21/2017.
National inventory levels now sit at 39.7M/bbls, which is about 100,000 more than a week ago but the report still listed inventories as flat week over week.
Regardless of that 100,000/bbls, we continue to experience a bullish circumstance; the very rare time when inventories draw down in April.
I looked back through our data pool, all the way back to 1985, and I could find just one April where propane stocks declined, and that was 1990. We ended March of 1990 with 33.1M/bbls of inventory and exited April with 32.1M/bbls of inventory. Here are the smallest April stock builds over the past 32 years:
As of right now, we have drawn 1.8M/bbls for the month of April, with roughly one more week’s worth of inventory reports to go. I believe we will be hard pressed to add 1.8M/bbls of propane to our stocks over the course of the final nine reporting days of April. Regardless, we will either experience the largest April inventory draw ever recorded, or one of just two April inventory draws ever recorded, or one of the smallest April builds ever recorded.
So you can pick your poison there…
As for what it means to the markets, they are up slightly immediately after this report, but I don’t see any sense of urgency in the trading community right now. Traders are not getting on barrels because retailers are not getting on barrels.
My views have not changed; these are some of the most bullish propane fundamentals I can ever recall at this time of year. I am shocked that prices are not $.1000 to $.1500 cents higher than where they are.
Chew on these items a bit:
-Inventory levels are at 39.7M/bbls. They were at 71.2M/bbls one year ago this week
-Inventories are 44.3% lower right now than they were one year ago this week
-Exports remain strong; 970,000/bpd, vs 699,000/bpd one year ago this week
-The four-week export average is 951,000/bpd vs 657,000/bpd one year ago this week
-Conway and Mt Belvieu propane inventory levels are well below the five-year average
-We built 2.3M/bbls of propane inventory this week one year ago
-We built 9.1M/bbls of propane inventory in April of 2016; we’ve drawn 1.8M so far this year
These factors make up my bullish rationale….these basic, fundamental drivers are all strongly bullish. Everyone I spoke with in Indianapolis (MPACT) and Nashville (Southeastern) is as shocked as I am pursuant to where propane prices are.
If nothing else, it offers another opportunity for dealers to set aside a few more pieces of contract gas for the upcoming winter at values that some folks thought we would not see again.
Thoughts of gift horses and looking in their mouths come to mind.
US propane inventories are up 100,000 (EIA reporting as flat) from last week to 39.7 million barrels as of 4/21/17. Inventory is 31.5 million below this time last year and 9.8 million below the 5-year average of 49.5 million.
Regional Inventories: Midwest up 700,000 to 11.9 million; Gulf down 100,000 to 23.6 million; East up 100,000 to 2.6 million; and West up 200,000 to 1.6 million.
Historical Averages: Midwest is 4.4 million below last year and 1.8 million below the 5-year average of 13.7 million. Gulf Coast inventory is 26.2 million below last year and 8.1 million below the 5-year average of 31.7 million. East Coast is 700,000 below last year and is 100,000 above the 5-year average of 2.5 million.
Total propane imports were up 31,000 to 119,000 bpd. East Coast down 5,000 to 24,000; Midwest up 27,000 to 59,000; Gulf unchanged at 0 bpd and West up 9,000 to 37,000.
Propane exports dipped slightly by 78,000 to 970,000 bpd.
Additional Inventory Numbers:
Crude: -4.1 mm to 1,219.5
Total Motor Gas: +3.4 mm to 241.0
Distillates: +2.7 mm to 150.9