Thursday, September 29, 2016
The National Propane Gas Association (NPGA) reports that data developed by IHS shows continued length in domestic propane inventory for September, with weekly estimates expected to outpace values seen in September 2015 and potentially setting a record for the month. The primary driver behind the growth in weekly stocks is a dramatic decline in propane exports due to low arbitrage economics in Asia, notes NPGA.
Over the next several months, arbitrage economics to Asia are expected to change as the winter months approach, leading to a recovery for export volumes. While this will allow some reduction in inventory, all PADD districts
are expected to see relatively healthy stock volumes.
Residential and commercial demand for the early winter months have been adjusted downward in the latest forecast owing to the release of the first National Oceanic and Atmospheric Administration (NOAA) weather forecast, which showed heating degree day expectations representing an average to slightly mild winter.
This is in sharp contrast to NOAA’s summer forecast of a shift from the warm El Niño patterns seen during the winter of 2015-2016 to cooler La Niña weather patterns. In spite of this change in weather forecasts, a pause in supply growth from gas plants is expected to keep inventory in range with values seen in the winter last year.
Over the next several months, arbitrage economics to Asia are expected to change as the winter months approach, leading to a recovery for export volumes. While this will allow some reduction in inventory, all PADD districts
are expected to see relatively healthy stock volumes.
Residential and commercial demand for the early winter months have been adjusted downward in the latest forecast owing to the release of the first National Oceanic and Atmospheric Administration (NOAA) weather forecast, which showed heating degree day expectations representing an average to slightly mild winter.
This is in sharp contrast to NOAA’s summer forecast of a shift from the warm El Niño patterns seen during the winter of 2015-2016 to cooler La Niña weather patterns. In spite of this change in weather forecasts, a pause in supply growth from gas plants is expected to keep inventory in range with values seen in the winter last year.
