Propane inventories grew by 1.7 million for a current total of 89.4 million, reported by the Energy Information Administration as of 7/24/15. Total inventory is still well above average at 22.2 million above last year and 22.4 million above the 5-year average of 67 million.
Regional Inventories: Midwest up 300,000 to 25.5 million; Gulf up 1.2 million to 56.4 million; East up 200,000 to 4.4 million; and West up 100,000 to 3.2 million.
Historical Averages: Midwest is 3.1 million above last year and is 2 million above the 5-year average of 23.5 million. Gulf Coast inventory is 20 million above last year and 20.3 million above the 5-year average of 36.1 million. East Coast is down 1.3 million from last year and is down 400,000 from the 5-year average of 4.8 million.
Propane imports were down 25,000 to 63,000 bpd. East Coast down 1,000 to 20,000; Midwest down 19,000 to 32,000; Gulf was flat at zero bpd and West down 7,000 to 10,000. Propane exports remain historically high and are flat from the last 5 weeks at 600,000 bpd.
Additional Inventory Numbers:
Crude Down: -4.2 mm to 1,154.8
Motor Gas Down: -0.4 mm to 215.9
Distillates Up: +2.6 mm to 144.1
The overall propane build is not a surprise. The 1.2 build in the Gulf, in the face of 600,000 bpd of exporting (which is max capacity at present) was a bit of a surprise. I think product is flowing south from Conway to Belvieu, as the 300K Midwest build is a bit light for this time of year.
Keep in mind something I wrote about this spring; export capacity at Belvieu is going to double in the coming six to 12 months. Petchems are also cracking propane right now north of 400,000 bpd. I am not saying we will burn through our inventory excess this winter; I have a hard time seeing that. However, I do think you should be eyeing purchases for 2016-2017 consumption. Many of my clients have already done this, mostly to a smaller degree. I wouldn’t recommend locking in 50% at this point…but I think everyone should own a piece of 2016-2017 winter gas right now, as it’s under $.8000 at nearly every terminal I know of and some terminals are below $.7000.