US propane market expects 1.69mn bl build

OREANDA-NEWS. April 22, 2015. The Energy Information Administration (EIA) is expected to report a 1.69mn bl build in US propane inventories tomorrow for the week,  according to the average of Argus' weekly survey.

The 25 market participants surveyed estimated a build in inventories ranging from 1mn bl to 2.6mn bl, with most respondents anticipating between 1.7mn bl and 1.8mn bl.

Last week the EIA reported a larger-than-expected build of 2.058mn bl for the week ended 10 April. Participants pointed to a slowdown in exports and warmer weather for that week as partial explanations for the larger build. The rise in inventories left US stockpiles standing at 60.017mn bl.

Vessel traffic in the Houston Ship Channel was steady last week and participants commented that both Targa and Enterprise seemed caught up on their export backlog. Propane exports were estimated at 3.8mn-4.8mn bl last week, with opinions varying on the cargo of several vessels.

Warmer weather has dampened propane demand and weakened prices at the Conway trading hub in Kansas in recent weeks, causing some to expect another large build in PADD II inventories. Temperatures were high last week, reaching the 70s F in parts of the midcontinent.

Spot markets saw moderate trading interest on Tuesday. Prices were weaker at the Gulf coast and midcontinent markets as WTI posted losses day-on-day.

Propane prices at Mont Belvieu, Texas, fell ahead of the EIA's inventory report as the anticipation of a build in the Gulf coast adds bearish sentiment to the lower demand season.

LST propane started the session sold at 56?/USG and fell to 54.75?/USG in choppy and active trade.

At the EPC terminal, propane was purchased early at 56.375?/USG and also fell to 54.75?/USG but in less liquid trade.

Conway, Kansas, propane softened on Tuesday as it dropped to 47.625?/USG from 49?/USG during the prior session. Trading was moderate and the price weakened intraday. Conway's discount to Gulf coast markets widened to 8?/USG.