Midwest propane market stronger than a year ago

The U.S. Energy Information Administration said last week that the Midwest propane market is in better shape than it was a year ago.

Propane prices in the Midwest have leveled off since last winter due to higher inventories, milder weather, and falling crude oil and natural gas prices

A milder winter has resulted in lower demand, resulting in propane markets in the Midwest remaining well supplied.

Compared to last year, inventories this year are 11.8 million barrels higher and 6.3 million barrels more than the five-year average as of Jan. 30, the Energy Information Administration said. 

Roughly 60 percent of propane was derived from natural gas processing and 40 percent from refinery crude oil processing in 2013. Prices since 2012 have split between crude oil and natural gas prices.

Decreased prices in crude oil have ultimately resulted in the narrowing of crude oil and natural gas. Also, propane spot prices at Roghthe Conway and Mont Belvieu have led to decreases due to inventory builds in the Midwest and Gulf Coast regions.

Midwest retail and wholesale propane prices before last winter had a spread of 65 cents per gallon. This spread was the result of more traditional propane supply and distribution patterns.

The spread increased last winter due to propane markets tightening and increased costs for moving supplies.

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