The effects of weakening global demand for propane can be seen in this week’s NGL price chart, where the Mont Belvieu, Texas, gallon (gal) slipped below $0.60.

Mont Belvieu propane last fell below $0.60/gal in late March but then quickly rebounded. The price had remained above $0.60/gal with that one-week exception since November, when it rose above $0.60/gas for the first time in 20 months, or since March 2015.

Conway, Kan., propane fell another 2.7% in the past week to below $0.57/gal. The Conway price has been more volatile over time than Mont Belvieu’s and its extended slump from late 2016 began in December 2014.

Behind this sluggishness are matters of global import ... literally. Demand trends in China and other Asian markets mean that growth will to slow to 250,000 barrels per day (Mbbl/d) this year, down from an estimated 360 Mbbl/d in 2016.

However, North American NGL supply growth is on the rise, notes Energy Security Analysis Inc. (ESAI) in its new “Global LPG Outlook.”

“As the year progresses, gains in supply will catch up with demand growth and bring the market back into balance,” ESAI said in a statement.

The company’s energy principal, Andrew Reed, said that his analysis revealed a market deficit earlier this year. ESAI’s projection, however, shows a swift return to surplus.

“The impressive builds in U.S. propane stocks in the past six weeks are evidence that supply growth is gaining on demand,” Reed said. “The build in U.S. propane stocks over the next several months will exceed the expectations of many.”

Propane prices are correlated to the price of West Texas Intermediate (WTI), which had withered to less than $45/bbl this week, thanks to a swelling rig count in the U.S. and less than total faith in OPEC’s ability to maintain its production cuts into 2018.

Then there is the role that cancellation-plagued June exports have played, said En*Vantage. That has led to larger-than-expected inventory builds, although propane stocks are still 35% below where they were last year at this time.

But En*Vantage has a more optimistic take on the outlook for prices because of the diplomatic isolation of Qatar by Saudi Arabia and other Persian Gulf states. Qatar exports about 330 Mbbl/d, mostly to Southeast Asia, and shipping through the gulf could be threatened by the neighboring states.

“The bottom line is that U.S. propane balances have been backed into a corner,” En*Vantage said. “Current propane inventories are still too low and bigger inventory builds will be short term at best.”

En*Vantage sticks by its forecast for tighter propane balances as winter nears.

One year ago, ethane enjoyed a 9.8% one-week spike at Mont Belvieu and 20.6% jolt at Conway. The year-ago change created a price comparison shift toward nostalgia this week as Mont Belvieu’s 2017 price was only 1.4% above the 2016 price and Conway’s recent price was 5.6% below the 2016 mark.

Storage of natural gas in the Lower 48 increased by 78 billion cubic feet (Bcf) in the week ended June 9, the U.S. Energy Information Administration (EIA) reported. The increase, below the Bloomberg consensus of 88 Bcf, resulted in a total of 2.709 Tcf. The figure is 10.6% below the 3.031 Tcf figure at the same time in 2016 and 9.2% above the five-year average of 2.481 Tcf.

Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.