Propane Inventories Reach Critical Days of Disposition

(March 9, 2018) — The National Propane Gas Association (NPGA) reports that due to cold weather in late December and early January, total U.S. propane inventories dropped to critical days of disposition levels in February. Propane days of disposition first reached critical levels of 19.8 days and eventually fell below 18 days of disposition in mid-February.

NPGA notes that IHS Waterborne February export data continued to show elevated levels of exports. Prices in Mont Belvieu reacted to the critical days of disposition and quickly increased from 73.00 cents/gal to more than 100.00 cents/gal. Thereafter, high prices greatly reduced the arbitrage to Japan, and IHS Waterborne expects exports to fall significantly in March and April.

If this occurs, inventory trends would be markedly different than those witnessed in 2017, which saw exports remain high well into the spring. If exports do fall according to arbitrage economics, IHS expects lower exports, combined with higher supply due to a recovery in U.S. crude oil production, to lead to well-stocked propane volumes and lower prices this spring and summer.