US Gulf Coast propane shed 37.5 points prices Wednesday following a reported 1.75 million-barrel stock build last week and a 70-cent/b drop in crude futures.
June non-LST propane, reflecting prices at the Enterprise storage and fractionation terminal in Mont Belvieu, Texas, fell to 57.5 cents/gal, but gained on crude futures by 1 percentage point to price at 57% of NYMEX August WTI. Nearby Lone Star barrels maintained a 25-point premium over non-LST.
Earlier in the day, following the 9:30 am CDT release of the Energy Information Administration's weekly inventory report, propane prices had climbed about 1 cent to 58.75 cents/gal, as crude futures were trading about 40 cents/b higher than Tuesday's settle.
US stocks of propane and propylene grew to 54.5 million barrels in the week ended June 16, EIA data showed Wednesday. The build was the smallest since May 19 and put inventory levels 25 million barrels below levels at the same time last year.
The largest build was in the Midwest, where stocks spiked 879,000 barrels to 17.63 million barrels, followed by the Gulf Coast where inventories grew 450,000 barrels to 30.49 million barrels.
One trader had expected a smaller build compared to previous weeks due to some companies pushing their cargo loading dates to end of the month rather than cancel early in the hopes of seeing improved arbitrages. The trader expected more of the 10 or more cargo cancellations reported in June to be reflected later in the month.
Market sources have reported one July cargo cancellation so far -- a mid-month Mabanaft cargo. Sources expect more companies to cancel cargoes in the second half of July.
A Mabanaft trader did not immediately respond to a request for comment.
One source said the smaller build was likely due to strong exports. The data showed exports fell 109,000 b/d to 707,000 b/d, but remained higher than the week of May 26 and June 2, when the EIA reported inventory builds of more than 3 million barrels.
Propane and propylene production dipped 8,000 b/d to 1.85 million b/d while product supplied, or implied demand, rose 200,000 b/d to 986,000 b/d, EIA data showed.
