Excess Propane Supply Provides Opportunity

According to the U.S. Energy Information Administration, February Heating Oil and Propane Update, U.S. propane supply is well above the five-year average.  This increase is the result of mild winter temperatures and continuing strong production.  Forecasts currently indicate the potential for record inventory coming into the summer fill season.  That is good news for propane retailers, farmers and others looking to fill bulk storage tanks at propane prices that should be well below last year’s cost.

U.S. Propane Inventory

As of the second week in February, the U.S. propane stock was near 75 million barrels.  That amount of inventory is well in excess of the five-year average for this time of year.  In addition to warmer than average winter temperatures across much of the U.S., production levels are exceeding demand and exports are lagging.  The Midwest U.S. is the one exception where propane inventories are near the five-year average.

U.S. propane stock in millions of barrels

Click on the chart to enlarge


Propane Supply Detail

See the table below for a more detailed view of U.S. propane inventory, production and demand.  Compared to a year ago, U.S. propane stock is up over 25 million barrels. As of the end of January,  production is up 306,000 barrels per day while demand is down by 742,000 barrels per day.

    change from
  01/31/20 week ago year ago
Stocks 83.445 +0.560 +25.928
Production 2.321 +0.032 +0.306
Demand 1.242 -0.135 -0.742
Note: Stocks in millions of barrels. Production and Demand in millions of barrels per day.

*Demand = Product Supplied; approximately represents consumption of petroleum products because it measures the disappearance of these products from primary sources.

Wholesale Propane Prices

This excess in supply is most certainly having an effect on wholesale propane prices.  As of February 17, 2020, the average wholesale price in the U.S. was $0.56 per gallon. That is down $0.26 per gallon from last year.

Forecast and Opportunity

The National Oceanic and Atmospheric Administration forecast for the remainder of February indicates above-normal temperatures for the entire eastern half of the U.S. and only a section of the lower-Rockies at below-normal temperatures.  All indications are that an excess in U.S. propane supply will remain at least into the spring and summer.  As a result, wholesale prices should stay well below last year’s spring and summer numbers. This should present a real opportunity this summer for propane retailers and the agriculture industry as each sector looks to add bulk storage and fill those tanks with lower priced propane.



Heating Oil and Propane Update – U.S. Energy Information Administration

Winter Propane Market Update – U.S. Energy Information Administration