Heavy Propane Demand Continues
December 5th, 2019
The energy market closed up strong yesterday as the inventory update reported the first major drop in US crude oil stocks in the past 6 weeks and growing anticipation that OPEC+ will agree to make more crude oil production cuts and extend the time frame of the agreement.
OPEC is meeting today and OPEC+ meets tomorrow so headlines will be watch and will drive the market here near term.
DOE inventory report called crude stocks down 4.86 million barrels putting total stocks at 447.096 million barrels. That is 3.934 million more barrels than last year for the same reporting week.
Cushing crude oil stocks are down 302,000 putting stocks at 43.822 million barrels which is 5.569 million more barrels than the same reporting week last year.
Gasoline stocks were up 3.39 million barrels putting total stocks at 229.36 million barrels which is 3.113 million more barrels than last year for the same reporting week.
Distillate stocks were up 3.06 million barrels putting total stocks at 119.47 million barrels which is 6.143 million barrels less than last year for the same reporting week. Distillate stocks are below the three-year average range and something to continue to monitor. This in my mind is an issue but the market doesn’t seem overly concern about stock levels at this time. Low supplies as the market heads towards the implementation of IMO 2020 should be more of a concern in my mind. Maybe the market has already baked these concerns into the market and prices are already up as a result. There are other market watchers that are saying the trade war with China is impacting the global economy and that is slowing energy demand so less fuel will be needed. Of course, no one knows how this all plays out, but it certainly bears watching.
Propane stock drew by 1.745 million barrels right on what the expectations were as heavy demand from colder temperatures and crop drying have keep propane supplies busy. The slight warm up and storms up north have slowed demand slight and temporarily, but this will likely pick up again as the vast majority of terminals continue to be on allocation and probably will be for some time.
Bloomberg reports that the US and China are moving closer to agreeing on the amount of tariffs to be rolled back in phase-one trade deal. Optimism that this deal can move forward keep energy market moving higher.