U.S. propane spot prices have declined from multiyear highs

After reaching multiyear highs in March, propane spot prices at the Mont Belvieu distribution hub in Texas have steadily declined. Propane prices reached $1.64 per gallon (gal) for the week ending March 11, 2022, the highest inflation-adjusted price since February 2014. Propane prices have declined by 32% since March to $1.14/gal for the week ending July 29, according to data from Refinitiv, an LSEG business.

Similar to other petroleum products, propane prices are connected to crude oil prices. Propane prices had been increasing along with a higher Brent crude oil price. Lower-than-average U.S. propane inventories last winter also put upward pressure on prices. However, since March, propane prices have declined as inventories increased.

Although domestic propane demand has been relatively flat, U.S. propane exports have increased as a result of strong global demand. On an annual basis, the United States has exported more propane than it has consumed in every year since 2017. Global demand for propane has risen because of its use as a petrochemical feedstock in propane dehydrogenation units and flexible feedstock crackers, particularly in Asia.

During the first five months of 2022, 53% of U.S. propane exports went to markets in Asia, mostly to Japan, China, and South Korea, according to our Petroleum Supply Monthly. As a result of Europe’s shift in energy supply following Russia’s full-scale invasion of Ukraine, U.S. propane exports to Europe accounted for 18% of U.S. propane exports during the first five months of the year, compared with 14% in the first five months of 2021.

Principal contributor: Josh Eiermann