Polar Vortex Split Sends Propane Demand To Near Two Decade Highs 

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by Tyler Durden
Thursday, Feb 11, 2021 - 09:42 AM

A polar vortex split that began pouring colder air into the US earlier this month helped boost the highest demand for propane in nearly two decades. 

According to Energy Information Administration (EIA) data this week, weekly government data last week showed demand for propane and propylene surged to a record of 2.2 million barrels per day. In return, propane supplies have sunk their lowest levels in two years.

Source: Bloomberg 

BAMWX's meteorologists warned earlier in the month of a 'deep freeze' set to strike North America. 

US Heating degree days for the first half of February have been well above trend, which means energy usage has increased to heat residential or commercial structures as temperatures dive. 

BAMWX's Feb. 4 energy outlook of the US outlined that colder weather would increase energy demand. 

In early January, when the polar vortex started to split, first pouring cold air into Asia and Europe - that fueled a surge in heating fuel exports to those regions.  

Propane use is very cyclical for the winter season. Still, there's a supply crunch as more than half of the fuel is diverted for industrial purposes. 

Ahead of the winter season, restaurants, bars, and clubs across the US panic hoarded supplies of propane tanks and outdoor heaters to keep their outdoor dining areas warm for customers considering indoor dining bans in multiple cities. During that time, we outlined how supplies of propane tanks were "flying off the shelves."

One of the most iconic pictures of this winter was during a snowstorm in New York City in mid-December when customers, barely kept warm by the heaters, were eating outdoors

Source: NYT 

Spot propane prices in Mont Belvieu, Texas, traded around 85.50 cents per gallon on Thursday morning, according to Refinitiv data, hitting two-year highs last month. 

The question remains just how long will elevated demand for propane last? 

Perhaps the 45-day heating degree day chart of the US-Lower 48 suggests above-average trends through this month but a decline is ahead.