(Updates prices in paragraphs 7-8, 11)
By Robert Gibbons
Jan 29 Propane inventories in the United States
fell last week, with stocks in the Midwest also dropping again,
a government report said on Wednesday, pushing up spot prices at
the key trading and storage hubs in Kansas and Texas.
Demand for the heating fuel driven by frigid temperatures
sent spot prices in the Midwest to a record near $5 a gallon
last week and had trucks from the region making the journey to
the Texas Gulf Coast seeking supply.
U.S. propane stockpiles fell 3.6 million barrels to 31.7
million barrels in the week to Jan. 24, according to data
released by the U.S. Energy Information Administration (EIA) on
Propane stocks in the Midwest region, plagued by tight
supplies and distribution problems, dropped 1.4 million barrels
to 8.8 million barrels in the week to Jan. 24, the EIA said.
The drop put stockpiles 50 percent below the level in the
same period in 2013, when inventories stood at 17.2 million
barrels, according to the EIA. Stocks in the region did not
slide below 10 million barrels until the week to March 22 during
the 2012-2013 winter heating season.
Midwest propane stocks have tumbled 32 percent since the
start of the year, with stocks falling to 8.8 million from 13.1
million over the past four weeks, according to the EIA data.
Spot propane for January at Conway, Kansas, traded from
$2.75 to $2.85 a gallon on Wednesday, traders and brokers said,
after trading as low as $2.10 a gallon the previous day.
Immediate supply, known as wet barrels, with the buyer
taking delivery on the day of the trade, traded as strong as
$3.04 a gallon. With only two days left in January, the price
for January supply, deliverable on any day of the month, and for
wet barrels should converge, brokers noted.
Spot prices more than doubled last week in Kansas compared
with where they ended the week on Jan. 17, when supply was
trading around $1.75 a gallon.
U.S. Gulf Coast inventories fell 1.5 million to 18.6 million
barrels last week, compared to 35.3 million barrels in the same
week a year ago.
At the Gulf Coast storage hub in Mont Belvieu, Texas, prices
traded as high as $1.64 a gallon on Wednesday, after trading on
Tuesday in a range from $1.52 to $1.53 cents a gallon. Long
lines of trucks continue at the Mont Belvieu hub, according to
brokers in the region.
"We got our transport loaded around 4:00 a.m. (CST) today,"
said a manager at a Gulf Coast distributer.
"The driver said to the loader that he will return in four
hours after delivering this load and asked if he could be put
back on the list to reload.
"They said yes (and my driver) is now 96th in line to load.
That calculates to be 48 hours wait time," the distributer said.
He added that he was hoping that the Texas loading
facilities would start loading trucks taking supply out of state
first because those trucks might not return as the supply
situation improves and prices drop in other regions.
Wednesday's EIA weekly report showed propane inventories
also fell on the East Coast, where stocks fell 600,000 barrels
to 2.6 million barrels last week. That was down from 3.7 million
barrels in the same week in 2013.
In a report last week, the EIA pointed to increased demand
for drying crops at harvest and the demand boosts from the cold
as factors causing the sharp price increases in the Midwest.
The EIA also cited logistical problems, including
maintenance on the Cochin Pipeline bringing supply from Canada
and rail transport disruptions, as factors causing propane
deliveries to the Midwest to be curtailed.
Exports of propane have also increased dramatically and
contributed to the drop in U.S. inventories.
U.S. propane exports surged to 408,000 barrels per day (bpd)
in October, according to the EIA, its most recent monthly data
EIA monthly export data available back to 1973 shows the
October export level was a record high. U.S. propane exports
first reached the 200,000-bpd level in November 2012 and never
exceeded 300,000 bpd until May 2013, according to the EIA data.
(Reporting by Robert Gibbons in New York; Editing by Jeffrey
Benkoe, Stephen Powell and Andre Grenon)