Beneath Still Waters

“Beneath still waters, there’s a strong undertow.”

- From the 1967 song written by Dallas Frazier

Why have Belvieu propane prices been rising so quickly?

The U.S. has a near-record amount of propane supply in storage heading into the winter season, both in terms of total propane inventories and “ready for sale” propane.

With so much inventory on hand, you may think that propane prices should be on the low side as a percentage of crude oil prices. And they have been for some time. In fact, only a month ago, propane prices were in the 36% range. They’re closer to 47% now.

What’s the cost difference between propane at 36% versus 47% of current crude oil prices? About $.25 per gallon!   

Adapt and Diversify

Six days ago, the India-bound LPG carrier “NV Sunshine” was attacked by Iran, setting the engine room and propulsion system on fire. That didn’t help propane prices, but there’s a stronger undercurrent at work here.

It’s a combination of frustration with the conflict in the Middle East, new export capacity coming online on the Gulf Coast of Texas, and a certain complacency on the part of buyers, given the fact that propane has been one of the lowest priced hydrocarbons on the market for some time now.

Whatever the catalyst, buyers are back.   

And the ongoing attacks in the Strait of Hormuz and Bab al-Mandab (with LPG export levels often 60% less than February levels) continue to disrupt traditional trade routes, forcing the global petroleum community to adapt and diversify, sending tankers to more secure supply sources.

Learning to Live with Less LPG from the Middle East

The reality is that many countries are learning to live with less LPG from the Middle East.  

This new dynamic is taking place at the same time as newly completed export capacity is coming online on the Gulf Coast of Texas. And there are more export expansion projects underway with estimated completion dates starting as early as next year.

The U.S. is already the world’s largest exporter of LPG (a propane-butane blend). But now we’ve also become one of the most secure and reliable supply sources for LPG exports in the world. That’s obviously becoming increasingly important for buyers and shipping interests.

Crop Drying

Another sign that we’re heading into winter is the annual crop-drying season which can be “boom or bust” for crop yields and propane demand.

Following on the heels of a record soybean crop, corn production for grain is forecast at 16.0 billion bushels. When all is said and done, this year’s corn harvest may be the 2^nd highest grain production on record!

So, please reach out to one of our crop-drying experts. Joe and Bryon grew up on a farm. They can talk the talk, and they’d love to hear from you. Let them help you with propane supply to meet your crop-drying requirements.

How Can Ray Energy Help?

It’s never too late to secure a reliable source of propane supply from Ray Energy, or to lock in the price of propane for your customers.

Oftentimes, when the current month prices move higher, the forward months are priced lower (backwardation) which creates a better value for buyers than when the future months are priced higher (contango) than the current month.   

Total U.S. Propane Stocks

The blue line shows our most recent inventory levels compared to the shaded area, which represents the 5-year range. We’ve been well above the 5-year range since last October.

Residential Propane Prices

Check out some regional price averages from last week for residential propane from the EIA. Note: The Belvieu market has moved up about $.16 per gallon since 10/05/26.

The Skinny

U.S. propane supply is still abundant, but Belvieu prices have been moving higher due to a combination of domestic and international events, strong export demand, and maybe some complacency from the buying community due to many months of low prices.  

Still, the price move seems overdone to me.

 As we head into the winter season, though, nothing is more important than working with people you trust and a midstream supplier that’s proven themselves during challenging times. And since 1904, being reliable has been more than a motto at Ray Energy, it’s our legacy.

When extreme weather drives demand and conditions become unpredictable, our team is prepared. With the infrastructure, experience, and commitment to perform when it matters most, Ray Energy ensures that your business has the supply it needs – no matter what winter brings.

“Your customers rely on you. You can rely on us.”

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