Average Stock Levels: Crude Market & Propane
Notes:
- This graph shows that propane was not alone in experiencing excess supply in 1998 and extraordinary stock builds. Note that the graph shows average stock levels during the year, not end-of-year stocks.
- Crude cycle:
- In 1996, the crude market tightened after a cold winter drew down stocks. Stocks dropped to very low levels as buyers kept expecting new supply to bring prices down, and they thus did not rebuild inventories.
- But the high-price/low-stock situation soon began to reverse. With the return of Iraqi supply to the market in 1997, followed by a loss of demand from the Asian economic crisis and a warm winter further reducing demand, supply exceeded demand, stocks built, and prices plummeted. Only the sizeable production cutbacks recently announced by OPEC turned prices around.
- Although the Asian economic crisis affected crude oil demand significantly, it seemed to have little effect on propane demand. In Asia, propane is used mainly for residential purposes, and this demand did not change much. Like Europe, Asian petrochemical plants were built to use naphtha, so the downturn in the petrochemicals business did not have much impact on Asian propane demand.
Average Stock Percent Changes from 1996-1998
Crude 303.4 MMB 332.5 MMB 10%
Distillate 107.0 MMB 141.4 MMB 32%
Propane 38.4 MMB 56.1 MMB 46%