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U.S. propane stocks increased by 1.9 million barrels last week to 74.7 million barrels as of August 22, 2014, 12.6 million barrels (20.4%) higher than a year ago. Gulf Coast inventories increased by 1.0 million barrels and Midwest inventories increased by 0.6 million barrels. East Coast inventories and Rocky Mountain/ West Coast inventories both increased by 0.1 million barrels. Propylene non-fuel-use inventories represented 5.0% of total propane inventories.

U.S. propane stocks increased by 2.5 million barrels last week to 72.8 million barrels as of August 15, 2014, 10.9 million barrels (17.7%) higher than a year ago. Gulf Coast inventories increased by 1.2 million barrels and Midwest inventories increased by 1.1 million barrels. East Coast inventories increased by 0.2 million barrels while Rocky Mountain/ West Coast inventories remained unchanged. Propylene non-fuel-use inventories represented 5.5% of total propane inventories.

Last winter, high propane prices, low inventories and logistical and infrastructure challenges prompted emergency measures to address propane supply shortfalls in the Midwest. Given the severity of last winter's supply challenges, market participants are paying close attention to the adequacy of propane supplies to meet agricultural and heating demands this coming season. While the high-demand season is still some months away, an analysis of propane inventory levels, along with an assessment of propane prices and changes in infrastructure and supply flows, provides some insight into the emerging supply picture.

Midwest propane inventories have an annual cycle, with builds occurring from April through September, in advance of the harvest and heating seasons, followed by draws in October through March. Both the level of inventories and the weekly build rate are useful metrics in assessing inventories as of early August. While inventory levels in the Midwest remain below the five-year average, above-average builds over the past six weeks are an encouraging trend. Last year, propane inventories in the Midwest (PADD 2) for the week ending August 9 were 21.5 million barrels, 3.4 million barrels below the five-year average. This year, PADD 2 propane inventories for the week ending August 8 are 23.4 million barrels, 1.9 million barrels higher than last year, but still 1.6 million barrels below the five-year average. However, in each of the past six weeks, PADD 2 propane inventory builds have surpassed their five-year averages, leading to a steady improvement in stock levels relative to their historical norms (Figure 1).
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