Here is a morning synopsis from Flashpoint’s Darius Lechtenberger:
“WTI crude oil and refined product prices are weaker this morning, following a torrid surge over the past week. Despite the pullback, bullish sentiment remains strong as the United States braces for a major Arctic blast at a time when supplies are below average across the board. Crude oil inventories are currently 6% below the five-year average, gasoline stocks are 1% below, and distillates are 4% below the seasonal norm. One other mess that will need to be cleaned up and is supportive of crude oil prices is the refilling of the Strategic Petroleum Reserve (SPR). This will create some difficulties for President Trump as he assumes office and seeks to keep energy prices in check. However, I remain confident that OPEC will step in to fill any global crude supply gaps and help stabilize prices. Meanwhile, propane prices have surged. Just one month ago, Conway propane closed at $0.7375, compared to yesterday’s close of $0.9425. Belvieu propane has also seen a notable increase, rising by $0.1250 over the same period.”
Yesterday saw the highest closing average in Conway since September of 2022, which was also the last month where Conway (and TET) propane had a daily closing average north of $1.00/cpg.
Propane inventories are ample. However, it’s the age-old problem of propane; you can have an ocean of inventory, but you can only get so much propane through your local terminals in a 24-hour period of time. Demand exceeds supply, and you see local basis/differential blowouts, and that is what we are witnessing at various supply points around the country, especially in the Ohio Valley and Northeast.
WEATHER: January of 2025 is off to an incredible start for home heating demand for much of the country, and it will stay that way through the rest of the month, based on current weather modeling. If the forecast for the next two weeks verifies, January of 2025 may wind up with the second-most GWHDDs of any January since 2014 and barely falling short of that epic month. It would be the second coldest January for the United States since 1995.
As we have shared, the party does not end once January ends. This is BAM’s updated Weeks three and four forecast:
