Nov. 20 (Bloomberg) -- Supplies of propane and propylene in the U.S. fell to the lowest level for mid-November since 1999 as domestic demand grows with exports at record levels.
Inventories dropped 2.44 million barrels to 58.4 million in the week ended Nov. 15, according to Energy Information Administration data. Exports have averaged 258,000 barrels a day this year, up from 171,000 in 2012. Propane can be used to dry crops during fall harvest and heat homes in the winter.
“What we have here is a really strong set of fundamentals for propane,” said Peter Fasullo, a principal at EnVantage Inc., an energy consulting firm in Houston. “We’ve had a really good crop-drying season, we have an early cold surge and we have strong exports. Add all that together, and it’s presenting us with a much tighter propane market than we’ve seen in a long time.”
Propane in Mont Belvieu, Texas, the largest storage hub in the U.S., rose 0.12 cent yesterday to $1.1875 a gallon, according to data compiled by Bloomberg. The price in Conway, Kansas, fell 0.5 cent to $1.205.
Propane production declined by 2,000 barrels a day to 1.442 million. Output reached a record level of 1.487 million during the week of Nov. 1.
Supplies fell the most on the Gulf Coast, where most of the U.S. export capacity is located. Stocks dropped by 1.82 million barrels to 31.3 million and dropped below the 10-year seasonal average for the first time this year.
Inventories in the Midwest slipped by 296,000 to 19.5 million barrels, the lowest level for this time of year since 1996. Crop-drying demand in the region has been larger than normal because of wet conditions and a record corn harvest.
Governors of Indiana, Iowa, Minnesota, Montana, Nebraska, South Dakota and Wisconsin declared states of emergency in late October and early November to allow propane tanker drivers to work longer hours to make extra deliveries.
“Crop-drying demand was at least 400,000 to 500,000 barrels a day over a several-weeks period,” Fasullo said. “That is winding down, but winter demand is starting to come in. That’s probably going to replace a lot of the crop-drying that occurred.”
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