The Energy Information Administration is working to correct nearly a month's worth of overstated Midwest propane/propylene stocks estimates in its Weekly Petroleum Status Reports.

The agency said it discovered just before it published its latest report on Wednesday that Midwest (PADD 2) propane inventory was overstated in all reports issued from Nov. 15 through Wednesday.

"We will provide more information once it has been resolved," the agency said in a Wednesday statement on its website.

EIA said it won't republish the reports to correct the data, but will instead release final November and December when it issues its Petroleum Supply Monthly reports for those months at the end of January and February respectively.

"Weekly data represent our best estimate at the time of publication until we release more complete and accurate monthly data."

EIA said the error also would affect the size of estimated stock changes and product supplied for propane/propylene, total petroleum and other oils.

Wednesday's report showed historically high inventory levels for the Midwest, Kansas-based energy commodity adviser Twin Feathers on Thursday.

The firm added that it believes EIA may have overestimated PADD 2 stocks over the period in question by 2.5 million to 3.5 million bbl. "Taking the midpoint of that range, we would see values very close to the prior December period - still near the five-year high but definitely not a historical high value."

Still, the firm believes that state level data in EIA's latest Winter Propane Market Update are accurate and could provide some insight into why the overstatement happened.

"We stated that the Belvieu/Conway spread could be widening due to these high inventory levels but hadn't yet," Twin Feathers said, adding that because of the potential overstatement, it does not believe this will occur.

"This does not change our overall fundamental bearish view of propane but does raise a likelihood of a [first-quarter] price spike when that data hits, " the firm said.

OPIS data gathered early Thursday showed the spread between Mont Belvieu non-TET propane and Conway propane narrowed by about 1ct based on fixed-price midpoints and the bid/ask on the Conway/non-TET spread was -4.375/-2.75.

Other market sources said they didn't believe the error would have a consequential impact on Conway propane prices.

"PADD 2 inventory has been running above the three-year average for several months," Dan Lippe, principal of Petral Consulting, told OPIS. "Until two weeks ago, EIA weekly inventory for PADD 2 was 1.8 million bbl above the three-year average. The past two weeks - which are normally weeks of declining inventory - stocks were 3 million to 4 million above the three-year average."

Keith Barnett, president of Energy Strategies International, told OPIS he suspects the problem is tied to the EIA's effort to break out fractionated propane from E/P mix or y-grade, pointing to a November notification from the agency that it would begin reporting stocks of propane that are fractionated and ready for sale as propane. But he said he does not believe the overestimate would cause too large of a miss given that overall balances don't point to a large miss.

A market source also said it's unlikely a correction will affect the Midwest market. "If winter weather doesn't show up by the end of January, Conway propane prices will have to price south if supply doesn't move north," he said.

When the EIA reports inventories for any petroleum product it is supposed to be the total amount of product stored at bulk terminals, such as salt caverns for propane, at refineries, in pipelines, and at natural gas processing plants.

EIA's Petroleum Supply Monthly Report provides the stocks by the type of product, which is considered a more thorough survey, Peter Fasullo, principal of EnVantage Consulting, said.

But in EIA's Weekly Report, the inventories are mostly estimated and extrapolated from data provided by storage operators. "Another complicating factor, in the case of propane, [EIA considers] that the propane stored can be fractioned propane, propane contained in the E/P mix, and propane contained in the y-grade that is stored," Fasullo explained. "Errors can occur when storage operators misreport or if the EIA inputs the wrong data in their models."

Regardless of what may have caused the error, Fasullo said he doesn't believe it will have much impact on the Midwest market or prices.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Karen Boman, kboman@opsinet.com; Editing by Jeff Barber, jbarber@opisnet.com

(END) Dow Jones Newswires

December 21, 2023 16:33 ET (21:33 GMT)