US propane stocks drop 2mn bl on correction

OREANDA-NEWS. December 03, 2015. Propane inventories in the US fell by 2.099mn bl for the week that ended 27 November as the Energy Information Administration (EIA) adjusted data for past tracking errors.

Following the draw, US propane inventories stand at 104.103mn bl, up 24.687mn bl from the last week of November the prior year and about 55pc above the five-year average.

The large draw is the result of a correction of the previous week's numbers, when the EIA reported an unexpectedly high build of 1.733mn bl following difficulty in tracking exports, according to an EIA spokesperson.

On average, market participants expected a build of 340,000 bl, with those surveyed calling for a range from flat with the previous week to a build of 1mn bl.

The largest reported draw of 1.603mn bl was seen in the Gulf coast, where exports are driving nearly all of US propane demand. PADD 3 inventories are now 63.248mn bl.

Stockpiles in the Midwest saw a small decline of 150,000 bl as domestic demand remains flat. PADD 2 inventories now stand at 29.654mn bl, up 3.51mn bl from late November last year.

In the Rockies and US West coast regions, stockpiles fell by 265,000 bl to 4.073mn bl as the regions continue to see mild weather.

On the East coast, propane inventories fell by a slight 82,000 bl to 7.128mn bl.

Spot propane prices at Mont Belvieu, Texas, fell on news of the draw. LST propane opened lower at 42.25?/USG as crude futures fell, but pared losses following the EIA report to reach an intraday high of 43.375?/USG.

EPC propane also opened lower at 41.875?/USG and rose following the report to 42.875?/USG.

Conway, Kansas, propane opened 1.75? lower at 35.5?/USG, the low for the morning. It then gained as high as 37?/USG prior to the release of the EIA inventory report. After word of the Gulf coast draw, traders left the market and speculated over the substantial decline in propane inventories. By midday, propane activity was illiquid at the midcontinent.

US propylene at bulk terminals fell by 307,000 bl to stand at 3.091mn bl, while US propane/propylene supplied to end-users rose by 449,000 b/d to 1.298mn b/d.