Market Snapshot: October 2023 propane inventories close to the five-year average, but winter weather projected to be mild

Release date: 2023-11-22

As of 1 October 2023, Canadian inventories of propane were 1,792 thousand cubic metres (10³m³) (11.3 million barrels [MMb]); slightly below the five-year (2018-2022) average and the level observed in October 2022.

Propane is a crucial energy resource for Canadians, it is important in the agricultural and petrochemical sectors, and serves as a heating fuel during winter. In North America, propane production is relatively steady from month to month, while demand peaks during the coldest months of the year. Propane inventories are essential to meet this peak winter demand. In Canada, the quantity of propane stored in underground caverns–located in Alberta, Saskatchewan, and Windsor/Sarnia, Ontario–typically reaches its highest point in October/November before declining as monthly withdrawals from storage exceed injections into storage.^Footnote 1

Figure 1: Underground Propane Inventories in Canada

Regionally, underground propane storage in Western Canada were at 1,120 10³m³ (7.0 MMb), with Ontario storing 672 10³m³ (4.2 MMb) as of 1 October 2023. Western Canada inventories were slightly below the five-year average of 1,164 10³m³ (7.3 MMb), while Ontario inventories were also slightly below the five-year average of 717 10³m³ (4.5 MMb).

Propane demand is influenced by seasonal factors. Extreme cold weather and increased agricultural demand can lead to rapid depletion of propane inventories, causing higher prices during the heating season. Conversely, warmer weather during the heating season and favorable harvest conditions can help maintain ample propane inventories, lowering prices throughout the winter, and leaving a potential surplus into the summer.

Canadian propane production from gas plants has been increasing in recent years, underpinned by growing gas production in Alberta and British Columbia. In August 2023, propane production was 47.5 10³m³ (299 thousand barrels per day [Mb/d]), almost 6% above August last year. Propane exports have also been growing, averaging 31.3 10³m³ (197 Mb/d) in the first eight months of 2023, a 4% increase over the same period last year.

Recent winter temperature outlooks from Environment and Climate Change Canada^Footnote 2 and the U.S. National Oceanic and Atmospheric Administration^Footnote 3 project milder winter weather, influenced by El Niño,^Footnote 4 which might ease pressure on propane demand and inventory withdrawals this year. In addition, ample U.S. propane supply stemming from growing U.S. gas production has put U.S. propane inventories, in particular in the U.S. Midwest, well above the five-year average. With the U.S. crop drying demand for propane almost over and a forecast of a warmer winter, the U.S. propane market also looks well supplied ahead of this winter.

Date modified:

2023-11-24