Slide 20 of 28
Notes:
- Before looking at the future, it is important to see the extent of the “over stock” situation today.
- In March, preliminary data show propane stocks to be about 9 million barrels above the average stock levels for this time of year. That is considerably improved from December, when propane stocks were almost 18 million barrels above average.
- January saw stocks drop about 17.5 million barrels, which is over 6 million barrels or 200 thousand barrels per day more than average. This drop rivaled the cold January 1994 decline, but prices hardly moved. At the end of the month, stocks were still almost 40 percent higher than average.
- The primary large stock decline in January is thought to be due to movement into secondary storage -- both retail and petrochemical.
- Weather in January turned cold in many regions. December had been unusually warm, but January temperatures returned to average January levels, which would cause some pull on the primary system.
- In addition, the over-supply situation made propane prices very attractive to petrochemicals producers, and the cold weather might have encouraged them to buy extra before prices went up. We also saw an increase in petrochemical demand for propane between December and January.
- March also saw a greater than normal decline as the weather turned cold briefly in several of the propane consuming areas and petrochemical demand remained firm. Still, a 9 million-barrel overhang remains.
