Strong Propane Demand in Upper Midwest
November 21st, 2019
Propane inventories had a big draw of 3.433 million barrels putting total stocks at 94.210 million barrels. Last year at this time total stocks were at 81.776 million barrels putting us 12.434 million barrels ahead of last year at this time. The propane stocks in the Midwest drew by 1.455 million barrels putting total stocks at 23.386 million barrels which is 3.187 million barrels less than last year at this time. The big draw in the Midwest along with the CN railway workers strike in Canada is a concern now for Midwest propane. The market has been dealing with the current demand crunch as best it can but putting terminals on allocation and limited some orders at retail and for the most part prices have not gone crazy. But if demand creates another big draw next week in the Midwest and the rail strike continues then propane price at Conway could be in for a push higher. So far, Conway prices have not moved up compared to the moves at the racks because this has been a transportation and logistical issue and not a supply issue. Another week like the last and it could become a supply issue which will impact price much more than we have experienced so far.
Gulf Coast propane stocks were down 2.503 million barrels putting total stocks at 58.170 million barrels compared to last year at this time when we had 44.316 million barrels. So, the market in the Gulf Coast is still ahead of last year by 13.854 million barrels.
The DOE inventory report showed that crude oil stocks were down 1.38 million barrels and crude stocks at Cushing, Ok were down 2.3 million barrels. Gasoline stocks were up 1.76 million barrels and distillate stocks were down 970,000 barrels. US crude oil production held steady at 12.8 million bpd.
Total crude stocks are at 450.380 million barrels and last year at this time there were 446.908 million barrels which puts us 3.472 million barrels ahead of last year.
Total gasoline stocks are at 220.846 million barrels. Last year at this time there were 225.315 million barrels which puts us 4.469 million barrels behind last year.
Total distillate stocks were at 115.681 million barrels compared to last year at this time when there were 119.191 million barrels, which is 3.510 less than last year at this time. The inventories of refined fuels products have gotten to a level that are concerning moving forward. The market it trying to determine is these low stocks level will be offset by lower demand due to a weaker economy.
The strong rebound yesterday was a bit confusing to me but later in the day I saw a report that said tensions in the Gulf had increased and I wasn’t sure why. The report said it was the result of Iran making the claims that the protest in their country over fuel price hikes was caused by foreign enemies. As a result of these claims the US aircraft carrier group, Abraham Lincoln sailed through the Strait of Hormuz. This all just stirred the pot again in the Middle East and got traders attention. The markets continue to rally today on this fear and other issues. Despite the big up move yesterday and today these markets are all in their trading ranges and have not broken out to the upside. I do not think we get the break out today. If we can sustain these gains today and have another strong up day tomorrow to close out the week then these markets could be ready to break out higher. But as has been the case on other attempts the bulls have not been able to sustain these rallies. We will just have to wait and see if traders are just waiting to take profits tomorrow and keep these markets rangebound or if it is finally time for a break of recent highs.