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We have a supply glut in propane, as we've been reporting for the past several months. Crude oil has also been battling the notion of a glut. While OPEC+ reaffirmed its commitment to keep production flat through March, the group is battling a surge in non-OPEC output. U.S. production has rebounded sharply following January’s winter disruptions, and a revitalized Venezuelan energy sector is increasingly flooding the market with heavy crude. With global inventory builds averaging 3.1 million b/d in 2026, the market is quickly transitioning to a reality where $60 oil may become the new ceiling rather than the floor.
I couldn't guess how many times I have referred to propane's relationship to crude oil since starting this blog in 2013, as well as always being a bit surprised that propane doesn't follow natural gas prices more closely, considering that far more propane comes from the natural gas stream than the oil side of things. I am not about to make a prediction that we will see a change in these drivers, but while crude oil's pricing future looks bearish, considering the glut (or the widespread belief in a glut), natural gas production is going to remain elevated, and the United States is the largest exporter of LNG in the world. Gas drilling will remain strong, which means associated gas production will remain high. As such, propane inventories should remain 'robust', to use a word. It would not surprise me to see us break new inventory records for propane come October.
Propane, like most energy commodities, will likely still be at risk from geopolitical unrest, and there is ample saber-rattling between the US/Israel, and Iran. Should hostilities be avoided, crude oil values likely drop back below $60/bbl. Summer driving season is just around the corner, so perhaps crude has a bit of a floor due to that, but all in all, there are not many bullish drivers in crude oil right now other than the threat of war.
