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Propane prices rise as stocks fall by 3.3 million barrels

Houston (Platts)--14 Feb 2018 508 pm EST/2208 GMT


US Gulf Coast propane prices continued to rise a fourth day Wednesday following a 3.3 million barrel inventory draw last week.

February non-LST propane, reflecting prices at the Enterprise NGL storage and fractionation facility in Mont Belvieu, Texas, climbed 1.875 cents day on day to 91 cents/gal, or 63% of front-month crude futures, as of S&P Global Platts' 1:30 pm CST close.

Propane kicked off the day at 91 cents/gal before trading as high as 93 cents/gal at 9:32 am CST, minutes after the Energy Information Administration released its weekly inventory report.

Propane prices dipped below 90 cents/gal in mid-January.

Lone Star barrels were heard trading at 84.25 cents/gal as their discount to Enterprise barrels continued to widen.

Market sources have attributed the widening spread to strong demand for Enterprise barrels with non-LST propane moving north to meet heating demand, onto the water for export and into Enterprise's propane dehydrogenation plant, which is expected to be fully operational by the end of February.

"The PDH is pulling and TEPPCO is pumping," a trader said of demand for propane out of the Enterprise caverns.

Additionally, one trader suggested that Lone Star's supply of propane may be ample as its Nederland, Texas, terminal exports the most butane out of the Gulf Coast terminals. More butane loadings would limit the number of spots for full propane cargoes, which would, in turn, leave more propane supply in cavern.

Total US propane and propylene stocks fell 3.3 million barrels to end the week of February 9 at 45.6 million barrels, or about 14% below the five-year average.

Gulf Coast stocks shed 1.3 million barrels to 29.2 million barrels while Midwest inventories dropped 1 million barrels to 11.8 million barrels.

East Coast stocks fell 867,000 barrels to 2.6 million barrels.

Total imports rose 34,000 b/d to 243,000 b/d, with almost half moving into the East Coast.

Exports spiked 369,000 b/d to 1.1 million b/d, the most active week of exports since the week ended December 15. Exports had not topped 1 million b/d since the week ended January 5.

S&P Global Platts Analytics data showed 22 vessels loaded LPG from US ports last week. Half of those vessels were VLGCs heading to Asia, Europe, the Mediterranean, Latin America and the Caribbean.

Platts assessed FOB Houston propane at a 5-cent premium to cavern product Tuesday, as freight dipped to $29/mt for the Houston-to-Northwest Europe route and $58/mt to Japan. Sources have said FOB cargo activity for the second half of March has slowed on lower netbacks.

Production dipped 14,000 b/d to 1.89 million b/d, down from last week's five-week high.

Product supplied, a proxy for domestic demand, fell 467,000 b/d to 1.54 million b/d. Implied demand has topped 1.1 million b/d since November.

--Andrea Salazar, andrea.salazar@spglobal.com

--Edited by Valarie Jackson, valarie.jackson@spglobal.com




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