Propane Outlook Conclusion
Lower residential prices possible this winter
U.S. inventories likely to be ample prior to the heating season.
- However, Midwest inventories remain relatively low
Demand uncertain due to weather and economy.
Lower natural gas prices likely to avert gas plant shut-ins.
But, temporary supply shortages may still occur due to existing bottlenecks in delivery system.
Notes:
EIA expects lower residential propane prices this winter compared to the high prices seen last winter.
As of now, it appears that propane inventories will be more than adequate going into this winter. Although inventories in the Midwest remain low, there is still time for the ample inventories in the Gulf Coast to make their way up into the Midwest before heating season begins in earnest.
As always, the major uncertainties affecting demand this winter are the weather and the economy. Other uncertainties affecting the propane market this winter are crude oil and natural gas prices.
If natural gas prices this winter are around what EIA expects them to be, we will likely see very little, if any, propane production shut-in at gas plants.
However, as the current situation with the TET shows, there could be short temporary supply shortages occurring this winter due to existing bottlenecks in the delivery system, even if inventories are plentiful.