Propane inventories had a large draw this week, 3.2M/bbls, as the first real ‘domestic demand’ draw of the year showed up in the inventory report…maybe.
Propane inventories are now just 1.9M/bbls ahead of where they were one year ago at this time, now at 76.6M/bbls. We had a 200,000/bbl build one year ago this week.
I want to highlight something in this next shot that is worth noting; the overall draw in inventories the past five weeks. Focus on the light orange shading. The left block is this year, the right block is last year, same weeks:
We have seen propane inventories draw down 7.9M/bbls the past five weeks, compared to 2.5M/bbls worth of draws for the same five-week period, one year ago. Exports are only up 2% during this same time, but propane production is much stronger this year than one year ago…however, the past four weeks, propane production has been very near where we were one year ago.
Domestic demand is the area if difference, as the past four-week period has seen over 200,000/bpd additional domestic demand compared to the same four-week period from last year, per the EIA report. That’s 5.4M/bbls more demand over the past 28 days than the same time last year, which aligns with the 5.6M/bbls of additional inventory drawing we have seen the past five weeks vs one year ago.
I know five weeks is not four weeks, but the overall trajectory makes sense…and it has been much colder the past five or six weeks than we saw one year ago.
All of this is to say the fundamental math lines up and it’s nice to actually see a fundamental factor like colder than normal weather show up so clearly in the numbers.
Which also makes the impending warm up period worth noting. Every major meteorological outfit has been advertising this warm up for weeks now, and it’s legit and seems unavoidable. This could be a two-week period of warmer than normal HDD’s.
Our partners, BAMWx.com, has also been forecasting this warm up, but they remain of the opinion, based more on their own research as opposed to what the models may or may not be seeing, that we will see a return of colder than normal temperatures around Christmas time, working their way from the west to the east.
One of the more popular historic weather analogs that keeps coming up in BAM’s research is the winter of 2002-2003. Weather analogs are useful tools for meteorologists, as they examine current weather patterns and atmospheric conditions and go back to look through history to find where similar or near identical set ups were in place, then taking a look at the resulting weather.
2002-2003 has been showing up as a prominent match for BAM for several months. Here is how December 2002 verified:
Here is what January and February of 2003 looked like:
This next chart is something I have put together, which shows combined HDD’s for January and February, at several locations around the country, for more than 20 years. Years are on vertical axis, locations are on the horizontal access. For this image, focus on 2003:
I sent this information out to subscribers earlier this week, and this is a reflection of the type of information we send to our clients.
Conway inventory saw a draw of 900,000/bbls week over week, and inventories at the crucial Midwestern trading hub sit at an identical level as one year ago; 24.3M/bbls. The Gulf saw a draw of 1.7M/bbls, and Gulf inventories are now 2.6M/bbls higher than last year at this time.
Subscribers to The Propane Buzz receive two and sometimes three weather related email updates per day (plus propane market commentary and analysis each day), which includes a seven to ten minute extended forecast video from BAMWx.com. This type of intel is invaluable to propane dealers this time of year, and you can subscribe for as little as $99/mo by clicking here. To put it simply, we do weather better than anyone in our industry.
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