What will propane prices do this winter?

Halloween brings out costumes, candy, and the possibility of some trickery. For the propane markets, Halloween also marks the end of a “shoulder” month that typically doesn’t see much domestic demand.  At this point, the North American domestic propane market usually wants propane prices to go higher, which would be a “Treat”, signaling strong demand.  However, that same market often worries if prices will instead “Trick” them and go lower.

Market History

Propane Prices: 2005 – 2014

In order to answer whether this winter will “Trick” or “Treat” the market, let’s look at some history.  Below is a table of average monthly Belvieu propane prices from 2005 to 2014:

In this table we track the lowest (yellow) and second lowest (orange) average month for Belvieu prices.  In this table we see these stats:

1. 16 out of 20 low and second lowest values for the decade came in the traditional winter months of November to March.
2. 4 of the lowest and second lowest values came during the summer months.
3. Four months (May, August, September and October) did not have a low or second lowest value.

Propane Prices: 2015 – 2023

But what about 2015 to the present.  Do we see the same type of trends?

For this time period we see these stats:

1. 9 out of 16 low and second lowest values occur in the traditional winter months of November to March.
2. 7 of the low and second lowest values occur in the summer months.
3. Only two months (September and October) have not seen a low or second lowest value.

Through both of these datasets we see the winter period being the lowest priced timeframe over 50+% of the time.   Only 30% of the time did the yearly low occur in the summer.

Conclusion: Watch out for “Tricks” this winter!

We advise clients to prepare for more “tricks” than “treats” this winter season.

Based on almost two decades of historical data, it seems that propane prices have good odds of “tricking” the domestic market during the winter period.  Toss in the fact that propane inventory levels are at record highs and the unknown impact of a possible El Nino weather pattern, then we advise being ready for more “tricks” than “treats” during this coming winter season.

For expert advice on managing the winter season, contact your Twin Feathers team. Learn how our commodity expertise can provide custom solutions for you as you navigate the potential “tricks” and “treats” of winter.