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(Updates prices in paragraphs 1-6; Changes headline; Adds detail about 2013 inventories in same period)
By Robert Gibbons
Jan 23 (Reuters) - Spot propane prices in the U.S. Midwest jumped more than $1 to a record near $5 a gallon on Thursday, traders and brokers said, as frigid temperatures spur demand for the heating fuel in a region where supplies already were tight.
Propane prices for January delivery at the Conway, Kansas, trading and storage hub reached $4.93 a gallon on Thursday, up from $3.39 on Wednesday, and more than double the price from last Friday, when propane traded at around $1.75 a gallon.
After nearing $5 a gallon, spot prices on Thursday fell back to $4.50 a gallon later in the day, trading sources said.
Prices at the Kansas hub for immediate supply, known as "wet barrels," reached $4.95 a gallon, trading sources said, after they surged to $3.59 a gallon on Wednesday.
Wet barrels were traded at $4.52 a gallon later on Thursday, after the earlier surge.
The average residential propane price in the Midwest region was $2.54 a gallon in the week up to Jan. 20, rising from $2.39 in the previous period. That was the highest since the U.S. Energy Information Administration (EIA) began tracking prices in October 1990.
Thursday's price at the Kansas hub was the highest in Reuters data tracking prices back to April 1989.
At the key Gulf Coast hub at Mont Belvieu, Texas, spot propane prices for January delivery reached $1.61 a gallon on Thursday, up 8 cents from the peak trade seen the previous day.
Prices received more support, traders said, from data showing U.S. propane inventories fell 3.4 million barrels to 35.3 million barrels in the week to Jan. 17. Inventories in the same period in 2013 stood at 60 million barrels.
Data released on Thursday by the EIA showed propane stocks in the Midwest dropped 1.3 million barrels to 10.2 million barrels last week.
That left Midwest stockpiles 46 percent lower than the comparable week in 2013, when stocks stood at 18.9 million barrels, according to EIA data.
In a report on Thursday, the EIA pointed to increased demand for drying crops at harvest in November and the demand boosts from the cold weather as factors causing the price jumps.
A late corn harvest last year and cold, wet weather requiring more supply to be used for crop drying helped drain supplies in the region.
The EIA also cited logistical problems, including maintenance on the Cochin Pipeline bringing supply from Canada and rail transport disruptions, helping to curtail propane deliveries to the region.
Since the week ending Oct. 11, propane inventories have fallen by 12.8 million barrels in the Midwest, the EIA said, compared with an average drop of 7.3 million barrels during that period over the previous five years.
The spread between Midwest and Texas Gulf Coast prices has spurred Midwest dealers to send drivers to pick up supply in Mont Belvieu.
"Long lines have formed at Mont Belvieu," said a Houston-based broker. "Lots of out of state trucks showing up."
While the cold snap in the Midwest is expected to ease over the weekend, another cold front is expected to push temperatures back into ranges that are severely below normal, according to the Commodity Weather Group.
Exports of propane have also surged and contributed to the drop in U.S. inventories. In a report last week, the EIA pointed to global prices for propane that are significantly higher than U.S. prices and said that propane supplies will continue to be moved to the Texas hub for export.
U.S. propane exports surged to 408,000 barrels per day (bpd) in October, according to the EIA, its most recent monthly data available.
The EIA's monthly export data available back to 1973 showed the October export level was a record high. The EIA data showed U.S. propane exports first reaching the 200,000-bpd level in November 2012 and never exceeding 300,000 bpd until May 2013. (Reporting by Robert Gibbons in New York; Editing by Grant McCool and Amanda Kwan)