Look! Up in the sky! Is it snowing? If not, propane prices might take some time to find their way to super.

Propane slipped 4.1% in the past week and last touched $1 per gallon (gal) on Oct. 16. It has not averaged $1/gal for the Hart Energy Wednesday-to-Tuesday five-day tracking period since the week ending Oct. 9. Since the start of October, when it peaked at $1.08/gal, propane has tumbled 23.7%. The Mont Belvieu, Texas, margin also narrowed by 9.3% to just over 51 cents/gal.

The issue has to do with timing, EnVantage Inc. said in a recent report. With crop drying nearly done and winter heating just starting to pick up, there is not much seasonal demand. However, there is:

  • A slump in oil prices;
  • Higher propane production; and
  • Rising inventories.

Exports are strong, though—even stronger than the U.S. Energy Information Administration (EIA) is reporting, EnVantage said. What is unclear is the volume of stored propane that is usable, meaning immediately available to the market. Analysts suspect the share of usable propane is relatively high, although there is no easy way to determine that from EIA statistics.

If that is the case, then propane balances could be tighter than the market perceives. But back to the weather.

EnVantage believes the only way to test the theory that propane storage is relatively tight is for the Northeast and Midwest to experience sustained cold weather. While storms have menaced the East Coast and chill is expected over the next week in those regions, serious cold is not yet in the offing.

And it might not get here. The National Oceanic and Atmospheric Administration’s (NOAA) winter outlook leans toward warmer temps.

“Although a weak El Niño is expected, it may still influence the winter season by bringing wetter conditions across the southern United States, and warmer, drier conditions to parts of the North,” said Mike Halpert, deputy director of the NOAA’s climate prediction center.

Ethane was off 1.6% at Mont Belvieu and is down 39% from its mid-September peak. Its margin was squeezed another 17% last week to about 8.5 cents/gal as natural gas prices rose.

Prices of the butanes rose but not enough to cover sharply higher gas prices. Margins shrunk slightly for normal butane and isobutane. C5+ slumped 10.9% at Mont Belvieu to its lowest point since early October 2017 as its margin took a 17% hit. Mont Belvieu’s hypothetical barrel was down 4.5% to its lowest point since mid-April. Its margin dropped 10.5% to $17.94/bbl.

Joseph Markman can be reached at jmarkman@hartenergy.com or @JHMarkman.

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