By Bobbie Clark
HOUSTON (ICIS)--US spot propane spot prices reached an 18-month high early on Wednesday, as supply statistics showed propane consumption rose by 15.9% for the week ending 1 November, while inventories fell by 4.2%.
Prices were approaching $1.1950/gal (€3.3471/litre), sources said, as the US Energy Information Administration (EIA) said propane supplies fell to 62.1m bbl, while consumption spiked to 1.775m bbl/day.
Meanwhile, propane exports were steady at an all-time high of 249,000 bbl/day.
This is the fourth straight week inventories have declined. Consumption has risen by 41.3% since 11 October, according to EIA statistics.
Year on year, consumption has risen by 28.0%, while inventories are down by 15.6%.
Spot propane prices have reflected these fundamentals.
Since the week ending 27 September, spot prices have risen by 10.4%, going from $1.0625/gal to $1.1725/gal. That’s the highest price since the week ending 27 April 2012, when spot prices traded in a range of $1.1750-1.1775/gal.
Sources said exports have been the main driver behind this run-up in prices. There has been some uptick in crop-drying demand, one source said, but not very significant.
The company has already announced plans to not only expand that facility, but also build a new one, bringing Enterprise’s total export capacity to 14m bbl/month.
Additionally, Phillps 66 has announced plans to develop its own LPG export site at Freeport, Texas, to be operational by mid-2016. The company said it will have a capacity of 4.4m bbl/month.
Sources said supplies cannot keep up with the current rate of consumption and exports.
However, production of propane is projected to increase over the next several years. There are also a number of pipeline projects in the works that will increase transportation between the US Gulf (USG) and other high-production regions in the US.
($1 = €0.74)