Will Propane Inventory Build Up Enough for Winter Demand?
August 25, 2021
The API inventory report called crude oil supplies down 1.6 million barrels and the Cushing, Ok crude oil supplies were down 485,000 barrels. Gasoline supplies were down 985,000 barrels and distillates were down 245,000 barrels. The estimates for today’s DOE inventory report from the Bloomberg survey are for crude to be down 2.491 million barrels, gasoline down 916,000 barrels, and distillate down 885,000 barrels.
Energy markets have had a very strong last two days of trading taking back most of the losses over the prior seven trading sessions. Prices are back to testing key resistance and the bulls need to close out this week strong above those levels to suggest the market is in an uptrend. The fundamental picture is still bullish, but the rising cases of COVID-19 had diminished the outlook for demand. News yesterday that China had reported no new cases and the news of a fire at a large oil platform in Mexico helped to support the rally. A more optimistic outlook that news reports of the delta variant cases may be a bit overblown was floated around the commentaries yesterday also offering a better outlook for energy demand.
Helping the demand outlook was also the news that the FDA had given full approval to the Pfizer/BioNTech COVID-19 vaccine.
The fire at the Mexican oil platform took about 25% of Mexico’s oil production out roughly 421,000 BPD. Hopefully, this is a near-term issue and production can be back online in the medium term.
The $3.50 cent move in WTI crude oil the other day was the largest one-day jump since November.
Propane inventories are forecast to increase by 1.128 million barrels in today’s propane inventory report. Propane supplies are expected to continue to build but the question remains will they build enough to get to a normal level prior to the winter season. The builds so far have not been impressive and if they do not improve over the next month then we will start the winter season in a tight supply situation. Regardless the best thing to do is get filled up early and stay full to avoid any issues.