Midwest propane retailers face trying times
March 2, 2021 By Mark Rachal
The Midwest has been oversupplied and low-valued long enough that it lacks investment to meet needs in high-demand periods, says Mark Rachal.
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The Midwest has been oversupplied and low-valued long enough that it lacks investment to meet needs in high-demand periods, says Mark Rachal.
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Despite the effects of the coronavirus pandemic, U.S. demand for petroleum products is recovering. Supply, however, is not.
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U.S. domestic demand for propane increased a whopping 714,000 barrels per day (bpd) during the fifth week of the year to 2.204 million bpd.
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If we can pluck good news from propane prices, it would be that next winter’s prices are much lower than the current prices.
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Days of supply measures available inventory to demand. As long as days of supply are trending lower, prices are certainly going to feel upward pressure.
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Since last week’s Trader’s Corner, there was a dramatic change in U.S. propane prices. The change began after the Martin Luther King Jr. Day holiday.
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The quick gains in propane prices like those experienced this past week can have an immediate impact on a retail company’s bottom line.
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As long as export demand remains strong, there is likely to be continued pressure on inventory and thus support for propane prices.
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The retail propane community was once a prominent component of the overall domestic demand picture, but the shale boom created other demand options.
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Hear from Mark Rachal, director of research and publications at Cost Management Solutions, about his expectations for the winter heating season and his advice for retailers.
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