U.S. PROPANE INVENTORIES AT LOW LEVEL

Late August propane stocks in the U.S. slid to their lowest levels since 1972, raising Department of Energy concerns about winter supplies. DOE's Energy Information Administration said the 51.4 million bbl in late August inventories were 3 million bbl below the same month last year and 9 million bbl below the August 1989 level. Propane stocks traditionally are built in late summer and early fall. East Coast and Midwest propane stocks were near the average range of the last 3 years.

Sept. 23, 1991

2 min read

Late August propane stocks in the U.S. slid to their lowest levels since 1972, raising Department of Energy concerns about winter supplies.

DOE's Energy Information Administration said the 51.4 million bbl in late August inventories were 3 million bbl below the same month last year and 9 million bbl below the August 1989 level.

Propane stocks traditionally are built in late summer and early fall.

East Coast and Midwest propane stocks were near the average range of the last 3 years.

However, Gulf Coast inventories, at 24.1 million bbl, were 6-11 million bbl below the levels recorded in August for the last 3 years.

The Gulf Coast normally holds about half of the nation's propane stocks. About one fourth of the propane produced on the Gulf Coast moves to other areas of the U.S., mostly the East Coast and Midwest.

EIA said demand for propane as a petrochemical feedstock in the Gulf Coast region was very strong last summer.

It also said the strong petrochemical demand is the result of the collapse of natural gas prices. That dragged down the price of natural gas liquids. And diversion of propane to the petrochemical market blocked the seasonal buildup of propane stocks.

"Even though a strengthening of natural gas prices is not expected in the short term," EIA said, "industry analysts believe higher propane prices this fall are inevitable. The belief is that low inventory levels this close to the beginning of the heating season will put upward pressure on propane prices.

"This in turn will shift a portion of propane demand away from the petrochemical market into the heating market. If this scenario proves to be accurate, the propane stock level at the primary level may peak in October instead of the normal August-September.

"Barring this late season build, supplies may be tenuous if the winter is unusually cold."