US propane stocks rise by 2.583mn bl: EIA

OREANDA-NEWS. May 21, 2015. US propane inventories rose by a larger than expected 2.538mn bl for the week that ended 15 May, according to the Energy Information Administration (EIA).

Market observers expected the EIA to report a 2mn bl build, with the 18 observers polled calling for a build between 1.4mn-2.4mn bl.

At 71.042mn bl, US inventories stand 69.79pc above the five-year average, and 31.131mn bl above where inventories stood during the third week in May last year.

The Gulf coast accounted for the majority of the build, climbing 2.187mn bl to stand at 46.882mn bl. The build was mostly driven by the continued shipments of propane to the US Gulf coast from the midcontinent, on a viable arbitrage between the Conway, Kansas and Mont Belvieu, Texas, hubs.

Market observers were surprised that exports did not whittle away at more of the propane inventories as exports were steady last week.

In the midcontinent, propane inventories rose by 160,000 bl to 18.235mn bl, compared to seeing a 355,000 bl draw the week prior. The draw was the result of a combination of product flowing south and tank refilling after the midcontinent region saw a brief drop in weather temperatures.

Inventories along the eastern seaboard climbed by 155,000 bl to stand at 3.463mn bl. Inventories have seen a slow in builds recently as propane exports out of Marcus Hook, Pennsylvania, have been ramping up.

At the west coast and Rocky Mountain regions, propane inventories rose by 81,000 bl to stand at 2.463mn bl.

Spot propane prices at Mont Belvieu, Texas, fell following the release of the EIA's data, however, a drop in crude stockpiles lent support and prices did not fall as far as expected.

LST propane started the session valued at 46?/USG, and rose to 46.25?/USG prior to the release of the EIA's data. Following the release of the report, prices plummeted to 44.75?/USG but regained strength in choppy trade. The market last stood at 45.125?/USG at midday.

EPC propane was sold early at 45?/USG and tumbled to 44?/USG following the release of the EIA's inventory report.

The midcontinent market at Conway, Kansas, saw a handful of deals done prior to the EIA's data release, firming the price to 41?/USG alongside WTI. Liquidity thinned thereafter, and market participants showed little surprise at the PADD II build figures.

Propylene at bulk terminals across the US rose by 402,000 bl, and product supplied to end-users fell by 128,000 b/d.