EIA REPORT
PROPANE BUILDS 600,000/bbls
REGIONAL INVENTORY LEVELS
Conway is now running at surplus (300,000/bbls) to last year for the same reporting week. The surplus in The Gulf (PADD 3) is now at 23.3M/bbls, the highest year over year surplus for the 2019-2020 supply season.
NATIONAL INVENTORY LEVELS
The year over year national inventory surplus now stands at 25.9M/bbls, which ties the same reading on September 13th for the high point for the 2019-2020 supply season. Inventories are at a robust 83.4M/bbls as of the end of January. For context and as best as my records show, the previous end of January high inventory position was 78.1M/bbls at the end of January 2016. National inventories for that 2016 supply build season would wind up peaking at 104M/bbls in September, which was just 100,000/bbls off the all time build peak of 104.1M/bbls, set in November of 2015. As a reminder, the end of March high water mark for inventory levels was 62.8M/bbls, also in 2016. It’s hard to envision a realistic scenario right now that keeps us from breaking that record at the end of March 2020. So we will likely heading into the 2020 build season with inventory levels at all time highs for an April 1 measuring period.
LAST THREE YEAR INVENTORY COMPARISON
Here is a visualization of propane inventories, week by week, over the past three years. The date period on the left begins with the first of April, which is the start of the traditional inventory building season and new propane contracting year. The numbers increase along the bottom, showing the EIA reporting week, with date markers sprinkled in. We just completed EIA reporting week 44. These are unprecedented times relative to the surplus of propane supply. Propane fundamentals remain very, very bearish.
KEY PROPANE PRICE INDICATORS SINCE JANUARY 1
Crude oil closed below $50/bbl yesterday, but it has been rallying today, up nearly $2/bbl as I write this at 10AM central time, on rumor/speculation that some type of treatment has been found for the Coronavirus, which could help stave off energy demand destruction around the world, specifically in China. Propane values have climbed a bit with the crude movement, but today’s EIA report is certainly bearish for propane values.