Propane Demand is Highly Seasonal, But Fresh Supply is Not
Source: Energy Information Administration
Notes:
Propane, like heating oil, has a highly seasonal demand pattern. Demand increases about 50% from its low point to its peak.
Production and net imports, on the other hand, do not vary much over a year.
Inventories balance the market, building during the summer when demand is less than production and net imports, and are used to meet demand during the winter when demand exceeds production and net imports. Thus, like heating oil, adequate inventories entering the heating season are critical to keep prices from increasing sharply.
Thus, stocks are a barometer for judging whether the propane market is tight or loose.