US Gulf Coast propane was at an 11-month high relative to the NYMEX front-month crude contract Friday morning as buying for the fall and winter heating season picks up and exports continued to drain US propane stocks.
Mont Belvieu propane was trading at $1.14/gal Friday morning, putting it at 47% of the NYMEX front-month crude contract.
Propane's ratio to crude has increased 12 percentage points from a yearly low in mid-June, when the propane market was in the middle of the shoulder season.
Gulf Coast propane has traded in a range of 35-50% of the NYMEX front-month crude contract for nearly two years, which is much lower than the 10-year historical average of 62.75%, Platts data showed.
The drop-off in the ratio was partially due to increasing propane supplies that overwhelmed the demand side of the propane market. As a result, propane stocks rose to an all-time high of 76 million barrels in October 2012, US Energy Information Administration data shows.
Since then, stocks have decreased 13%, with the most recent weekly EIA storage report showing total US propane stocks at 66 million barrels.
The large draw in stocks over the past year is primarily a result of increasing exports from the Gulf Coast, market sources have said.
The most recent export data from the EIA showed Gulf Coast exports totaled 60.3 million barrels through July, compared to 40.52 million barrels through the first seven months of 2012.
In March, Enterprise expanded its Houston export terminal, which hiked the total export rate at the facility to around 250,000 b/d (830,000 mt/month) from 115,000 b/d (375,000 mt/month). It will export between 65-70 million barrels of LPG from its Houston Ship Channel export terminal this year, and the company has said it expects that to rise with long-term contracts to new destinations.
In addition, Targa Resources started loading VLGCs at its Houston Ship Channel export facility in June, which brought the total of its facility to 3-3.5 million barrels/month, up from 1-1.5 million barrels/month.
