US Gulf Coast propane prices rose nearly 1 cent Thursday even as Energy Information Administration data showed a 2.12 million-barrel stock build last week.
July non-LST propane rose 87.5 points to 61 cents/gal, with Lone Star barrels at a 12.5-point discount and August barrels at parity.
Propane prices climbed along with NYMEX August WTI, which settled 39 cents higher at $45.52/b. While propane's outright price rose on the day, its value relative to crude futures was unchanged at 56% of the August contract.
EIA data released Thursday showed a more than 2 million-barrel build to 60.57 million barrels in the week ended June 30. At the same time last year, inventories were 29.3 million barrels higher.
The largest build came in the Gulf Coast, where stocks grew 1.43 million barrels to 34.46 million barrels. Midwest inventories climbed 665,000 barrels to 18.84 million barrels, EIA data showed.
Market sources had expected total propane stocks to grow 2.5 million to 2.8 million barrels.
Propane exports rose 5,000 b/d to 476,000 b/d, but remained below the 901,000 b/d average since January.
The propane arbitrages to Europe and Asia have looked closed on paper since early April resulting in a total of more than 20 propane cargo cancellations reported in May and June. Market sources have reported five to ten cargo cancellations or non-liftings in July. Two canceled cargoes were said to have been resurrected by term contract players, meaning those cargoes were eventually resold. It's unclear who was involved in those "zombie" cargoes.
"These are done direct," a market source said. "The best part of buying a cargo that was 'uncanceled' is that the market will never know."
The source said uncanceled cargoes had not occurred until about a month ago.
"It's just that the market is so bad," the source said. "In the past, the terminal would take your cancellation fee and then resell the cargo above spot market levels to someone else but the demand isn't there anymore, so they let people uncancel when they can."
Propane production fell 18,000 b/d to 1.83 million b/d while product supplied, or implied demand, climbed 245,000 b/d to 1.16 million b/d, EIA data showed.
NGL stocks, excluding propane, grew 2.13 million barrels to 135.54 million barrels.
