The U.S. Energy Information Administration (EIA) reports today that November propane demand reached record levels. Intense agricultural demand for fuel to dry a very large, wet crop had several states under emergency declarations, allowing delivery truck drivers more time on the road to service demand.
Meanwhile, 2013 production has set records of its own according to EIA who notes, "Propane production in the United States has set record highs on an almost weekly basis in 2013 as a result of increased oil and natural gas drilling and high refining utilization rates."
Despite growth in propane production, inventories in the Midwest have fallen to lows not seen since 1996. Part of the supply crunch is due to increased exports which are currently estimated at 288,000 barrels per day -- very near May 2013's record sendouts of 308,000 barrels per day.
The result has been higher propane pricing across the nation with the current Midwest average price reported to your Inputs Monitor currently 35 cents above year-ago at $1.77. Propane set annual price lows in July in both 2012 and 2013 when demand is mostly limited to exports and backyard barbecues.
So while production features are making a solid effort at maintaining national propane supplies, domestic and export demand continue to draw on inventories. Frigid temperatures across 2/3's of the United States are expected to stick around for awhile, and demand for propane is not likely to fall off anytime soon. That will limit downside potential for propane until either exports or seasonal demand wane and allow supplies to build.
Graphs provided by EIA