Its December and officially winter. We are in the cusp of our first polar vortex of year. Temperatures are expected to be 20-30 degrees below normal this week in the key propane market areas of the Midwest & East Coast.
Let’s do a quick update on propane prices today. As of the week ending 01/02/23, according to the EIA the average price of retail propane on the east coast is $2.686, versus this time last year of $2.671. This price is made up of all retail propane so it includes everything from baroque tanks to 1000-gallon tank prices for whole house heating. In addition, this price includes gallons sold to customer owned and company owned tanks.
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Total Propane inventories for the US are currently at 99.252 (million barrels) as of week ending 01/02/23. This is versus 100.658 (million barrels) as of week ending 01/04/23. Inventors are down versus last year but are still within the range of the seasonal average for this time of year.
Crude Oil Prices jumped up last week when OPEC announced a production cuts. All crude oil derivative energy products (gasoline, heating oil) followed suit and jumped across the board. In addition, Natural gas prices have been steady this winter as well. Propane is a byproduct of the two and has risen as well. Long term, Propane in the us is made domestically and is a byproduct of US drillers of oil & natural gas. If OPEC decreases production, those barrels taken off the market will be replaced by US crude oil barrels. So this announcement might have a long term impact of reducing propane prices.
The other factor driving prices is the impending cold weather that is upon us. Having a cold early winter could create inventories to draw down and could keep pressure on prices this winter. In the short term crude oil and natural gas prices rising will also keep some pressure on prices.
I would recommend for anybody that is on a will call delivery basis to call and get their tank topped off sooner than later . While prices have gone up slightly it is still a very good to top off any tanks. Get local quotes here.
