Market Snapshot: Propane inventories in November 2024 fall short of five-year average, La Niña forecast suggests milder winter

Release date: 2024-11-27

As of 1 November 2024, Canadian underground propane inventories were 1,587 thousand cubic metres (10³m³) (9.98 million barrels [MMb]), which is 15% below the five-year (2019-2023) average of 1,870 thousand cubic metres (10³m³) (11.76 million barrels [MMb]) and 13% lower than the 1,820 10³m³ (11.45 MMb) recorded for November 2023. Regionally, underground propane storage in Western Canada was at 1,090 10³m³ (6.85 MMb), with Ontario storing 497 10³m³ (3.13 MMb) as of 1 November 2024. Western Canada’s inventories were just 2% below the five-year average of 1,109 10³m³ (6.98 MMb), while Ontario’s inventories were significantly lower, at 35% below the five-year average of 760 10³m³ (4.78 MMb).

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 salt 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

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 favourable harvest conditions can help maintain ample propane inventories, lowering prices throughout the winter, and leaving a potential surplus into the summer. 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 La Niña,^Footnote 4 which might ease pressure on propane demand and inventory withdrawals this year.

Canadian propane production from gas plants has been increasing in recent years, underpinned by growing natural gas production in Alberta and British Columbia. In June 2024, propane production^Footnote 5 was 51.3 10³m³/d (323 thousand barrels per day [Mbd]), almost 19 % above June last year. Propane exports have also been growing, averaging 36.2 10³m³/d (227 Mb/d) in the first six months of 2024, a 10% increase over the same period last year^Footnote 6. In addition, ample U.S. propane supply stemming from growing U.S. natural gas production has put U.S. propane inventories, and particularly those in the U.S. Midwest, close to the five-year maximum.

Date modified:

2024-11-27