US propane and propylene stocks dropped 3.22 million barrels to 47.85 million barrels in the reporting week that ended Friday, the Energy Information Administration said Wednesday.
Midwest supplies fell 926,000 barrels to 13.52 million barrels, East Coast supplies declined 552,000 barrels to 1.78 million barrels, Gulf Coast stocks dropped 1.62 million barrels to 31.74 million barrels and West Coast/Rocky Mountain inventories fell 119,000 barrels to 802,000 barrels.
Propane and propylene for nonfuel use rose 40,000 barrels to 2.95 million barrels.
The Gulf Coast draw in propane stocks was the largest such volume since the reporting week of January 28, 2011, which saw a decline of 1.84 million barrels, EIA data showed.
The fall in propane stock levels was attributed to colder weather as well as robust petrochemical cracking margins, sources said.
Strong propylene, a tightness resulting from limited supply due to refinery FCC issues, has incentivized petrochemical producers to crack more propane to yield higher amounts of propylene. Current cracking margins for propane are at 51.54 cents/lb while E/P mix is at 46.69 cents/lb and ethane is at 43.47 cents/lb, according to Platts data.
But the propane market remains seasonally oversupplied despite the draw in stocks. Total US propane inventories stood at 47.85 million barrels, nearly 4 million barrels higher than the same reporting week of 2012 and almost 20 million barrels higher than 2011, EIA data showed. Gulf Coast stocks are 8.76 million barrels higher than the corresponding reporting week in 2012, EIA data showed.
"The draw is big overall, but it's just one week and last week [draw] was smaller than expected," a Gulf Coast NGL trader said.
Large draws out of Gulf Coast storage could continue into next week as colder weather blankets much of the US and Enterprise completes the commission phase of an expansion at its Houston Ship Channel propane export facility.
Enterprise spokesman Rick Rainey confirmed in an email Wednesday that Enterprise expects the facility to be operational soon (See story, 1952 GMT).
