HOUSTON, March 10, 2014 /PRNewswire/ -- U.S. spot prices for propane, a petroleum product used for home heating, chemical production, crop drying and outdoor cooking, dropped sharply in recent weeks, signaling the end of seasonal buying during a particularly long and harsh winter, according to PetroChem Wire.
Spot propane, which sold in mid-February for close to $1.60 per gallon, sold for $1.09 per gallon on March 7, a level not seen since early last October, according to the daily newsletter. The mid-February price was significantly higher than the price peak reached the previous winter when spot propane typically traded on the Gulf Coast under $1 per gallon.
Propane prices were high in recent months due to the unusually cold weather throughout much of the U.S. and increased demand for propane for crop drying. The agricultural industry uses propane to power various farm equipment. That includes propane-powered drying systems that help farmers meet crop moisture content specifications needed to prevent rotting in storage and, therefore, get better prices for their harvest.
"The late harvest this year due to heavy rains created competition with pre-winter buying from retailers," said Pat Whalen, managing editor of PetroChem Wire.
Crops were wetter than normal this past fall, and that, coupled with a later harvest, meant that agricultural propane demand was higher and later than usual, overlapping winter propane demand for heating fuel. Propane inventories were also low, prompting early, eager buying interest from all segments, further supporting higher prices.
LPG terminal expansions have also encouraged higher U.S. propane exports, contributing to the tighter domestic supply and firmer prices.
The PetroChem Wire is a daily newsletter that provides price assessments on major petrochemicals, polymers and natural gas liquids. It also produces ethylene pipeline system maps. For more information, see www.petrochemwire.com
SOURCE PetroChem Wire