US propane stocks rise by 3.828mn bl: EIA

OREANDA-NEWS. June 04, 2015. US propane stocks rose by a larger-than-expected 3.828mn bl for the week that ended 29 May.

Market observers expected the US Energy Information Administration (EIA) to report an average 2.31mn bl build in stockpiles, with forecasts ranging between 1.6mn bl to 3.1mn bl, according to an Argus survey.

At 77.046mn bl, inventories stand 68.8pc above the five-year average and 31.271mn bl above inventory levels seen during the same week last year.

The US Gulf coast accounted for the majority of the build, climbing by 2.338mn bl to 50.195mn bl, the highest inventories have been since the EIA began recording storage levels.

The large build was likely because of a combination of a slowdown in exports thanks to stormy weather, little demand for the product and ongoing production at Mont Belvieu, Texas.

Additionally, more volumes of butane rather than propane have been heard moving out of the Mariner South export terminal at Nederland, Texas, leaving more volumes of propane at the Gulf coast.

Spot propane prices at Mont Belvieu fell following the release of the EIA's data. LST propane started the session at 43.5?/USG, and rose to a morning high of 45?/USG ahead of the report. Following the release, the market traded lower, at 44?/USG and continued to fall to 41.25?/USG.

At the EPC terminal, propane was purchased early at 42.875?/USG and fell to 40.125?/USG following the release of the EIA's data, although trade at EPC was less liquid than at the LST terminal.

At the midcontinent, propane stockpiles rose by 1.104mn bl to stand at 19.762mn bl. Previously, volumes of propane were moving south to capture the attractive arbitrage with the Mont Belvieu hub. Since the drop in propane prices at the Gulf coast, coupled with storage constraints, propane has not been heard moving south.

Conway, Kansas, propane opened 3.25? weaker from Tuesday's close but firmed quickly to 39.25?/USG in the early morning. Prices plunged upon the data release, dropping 7.125?/USG within minutes to a low of 32.125?/USG. The price has recovered slightly since.

Along the eastern seaboard, inventories rose by 400,000 bl to 4.476mn bl, while at the west coast and Rocky Mountain regions stockpiles fell by a slight 14,000 bl to 2.614mn bl.

Propylene at bulk terminals across the US fell by 72,000 bl, and product supplied to end-users fell by 282,000 b/d.