Winter Distillate and Propane Outlook

1
Winter Distillate and Propane Outlook

• Joanne Shore
• Energy Information Administration
• State Heating Oil and Propane Program
• August 2000

2
Distillate Prices Increasing With Crude Oil
3
Distillate Supply/Demand Balance Reflected in
Spreads
4
Distillate Stocks are Low Especially on the
East Coast
Source EIA
5
Distillate Stocks Are Important Part of East
Coast Winter Supply
Source EIA
6
Warm Winters Held Heating Oil Demand Down While
Diesel Grew
Source EIA
7
Distillate Demand Strong in December 1999
Sources History EIA Projections Short-Term
Energy Outlook, August 2000.
8
Dec 1999 Jan 2000 Production Fell, But
Rebounded with Price
Sources History EIA Projections Short-Term
Energy Outlook, August 2000.
9
More Supply Possible This Fall than Forecast
Sources History EIA Projections Short-Term
Energy Outlook, August 2000.
10
Unusual Net Imports May Only Be Available At A
High Price
Sources History EIA Projections Short-Term
Energy Outlook, August 2000.
11
Distillate Stocks Expected to Remain Low
Sources History EIA Projections Short-Term
Energy Outlook, August 2000.
12
Winter Crude Oil and Distillate Price Outlook
Sources History EIA Projections Short-Term
Energy Outlook, August 2000.
13
Conclusion

• Distillate stocks likely to be low going into
  winter
• Prices likely to average as high as last winter
  even without volatility
• Residential customers will need to purchase more
  fuel this winter if weather is normal
• Same price times higher volumes equals higher
  bills this winter than last

14
Propane Prices Follow Crude Oil
Source SP DRI Platts Spot Prices, EIA Retail
15
Propane Demand is Highly Seasonal, But Fresh
Supply is Not
Source EIA
16
Propane Sector Demand Shares
Source 1997 Sales of NGLs, API
17
U.S. Propane Demand Jan-May
Source EIA
18
U.S. Propane Production by Source
Source EIA
19
Waterborne Imports Fall
Source EIA
20
Exports of Propane High in 2000
Source EIA
21
U.S. Propane Net Imports Jan-May
Source EIA
22
U.S. Propane Stocks
Source EIA
23
PAD District II Stocks (Midwest)
Source EIA
24
Propane Stocks Are Important Part of Midwest
Winter Supply
Source EIA
25
Conclusion

• Propane inventories are expected to begin the
  heating season somewhat low -- especially in the
  Midwest
• Propane supply likely to remain above prior year
• high co-production of propane as refineries
  continue to meet strong petroleum demand
• high gas plant production of propane as surging
  crude oil prices keep gas plant margins in
  positive territory.
• However, propane exports and demand also may be
  high
• higher U.S. exports of propane are uncertain
• Residential heating demand likely to increase if
  weather returns to normal following warm weather
  during the past two winters.
• Consumers will continue to pay more due to higher
  world oil prices