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NGL inventory cushion grows as propane stocks reach highest April on record

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NGL inventory cushion grows as propane stocks reach highest April on record

Despitesome signs that production of crude oil has begun to decline amid the lowerprice environment, output growth of natural gas and natural gas liquids hasmerely slowed or paused and shows a U.S. market that remains fairly wellsupplied.

Natural gas liquids

Inventoriesof NGLs grew 15.83 MMbbl from March to reach 170.23 MMbbl in April, accordingto "Supply and Disposition" data from the U.S. Energy InformationAdministration published on June 30. The level of inventories was 13.21 MMbblabove the same month a year earlier and 44.76 MMbbl above the five-year average.

Thegain in the inventory level was mostly the result of higher production, whichrose 161 Mbbl/d sequentially to reach a new record of 4.30 MMbbl/d. Theprevious record was 4.14 MMbbl/d set in March.

Theincrease in supply was caused mostly by refineries outputting higher levels ofbutane, as demand tends to decline between February and September as refineriesuse less of the product in summer gasoline blending. Field-level production ofNGLs dropped 5 Mbbl/d to 3.50 MMbbl/d but remained near the record high of 3.51MMbbl/d set in March.

Asecondary factor boosting inventories came from lower demand, with a decline of210 Mbbl/d reported between March and April. At 2.30 MMbbl/d, demand in Aprilwas above the five-year average level of 2.21 MMbbl/d.

Propane

Inventoriesof propane and propylene increased 7.48 MMbbl in April from the prior month andreached 73.86 MMbbl. It was the highest level for any month of April on record,after inventories surpassed the previous April peak made in 1976 at 72.79 MMbbl.

Inventorieswere up 8.58 MMbbl from the same month a year ago, and remained below therecord high of 104.46 MMbbl reached in November 2015. They were 29.98 MMbblabove the five-year average and improved from 27.00 MMbbl above it in theprevious month.

Productionrose 2 Mbbl/d to a record 1.764 MMbbl/d, with the previous record set in Marchat 1.762 MMbbl/d. Refinery output grew 5 Mbbl/d while field-level productiondeclined 3 Mbbl/d.

Propaneexports increased 27 Mbbl/d from the previous month to 700 Mbbl/d after exportsin February reached a record of 884 Mbbl/d. Exports were up 64 Mbbl/d from thesame month a year ago.

Exportsof butane gained 15 Mbbl/d to reach 132 Mbbl/d, still short of the record of136 Mbbl/d set in June 2015. Combined exports of propane and butane increased42 Mbbl/d on the month to 832 Mbbl/d. A record of 957 Mbbl/d was reached inJanuary.

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Daysof supply of propane rose to 80.5 days, from 57.2 days in the prior month, andwere considerably above the five-year average of 43.4 days.

Propanedemand lost 242 Mbbl/d and fell to 918 Mbbl/d. Demand was 102 Mbbl/d below thefive-year average.

Ethane

Inventoriesof ethane increased 3.83 MMbbl in April from March and reached 39.06 MMbbl.Ethane inventories gained 7.36 MMbbl from the same month a year ago, andnarrowed the gap with the record of 41.19 MMbbl set in July 2014.

Exportsincreased 1 Mbbl/d to 86 Mbbl/d and was enough to marginally surpass the recordof 85 Mbbl/d set in March.

Productionincreased 7 Mbbl/d from the previous month and 149 Mbbl/d from a year ago toreach a new record of 1.29 MMbbl/d. Ethane demand declined 41 Mbbl/d to 1.08MMbbl/d, and remained below the record of 1.17 MMbbl/d set in November 2015.

Market prices and includedindustry data are current as of the time of publication and are subject tochange. For more detailed market data, including powerand naturalgas index prices, as well as forwardsand futures,visit our Commodities Pages.