Very low days of disposition entering the winter; risk of critical days of disposition this winter remains high primarily in PADD 3
US exports continue to remain high to Asia and the risk for low days of disposition for the US as a whole remains high. The primary reason behind the high exports are tepid Middle East exports to Asia and high naphtha to propane spreads incentivizing PDH economics in China. The high exports have stalled the required growth in PADD 3 inventory necessary to replenish inventory in the US to safe days of disposition. However, in October, PADD 3 inventory saw strong growth due primarily to high levels of associated gas plant production due to record high crude and gas production. This led to days of disposition for the US as a whole to increase in September and led to some weakness in propane to WTI price ratios.
Despite the sharp rise in PADD 3 inventory in September, the trend report forecasts shows that inventory on a days of disposition basis is not growing at an adequate rate to replenish stocks in PADD 3 in time for the winter months. It should be noted that this is primarily a PADD 3 phenomenon and that PADD 1 and PADD 2 inventories appear to be well stocked at the end of October.