Winter Recap
Weather is always the wild card in the winter season. This winter, weather was not a big factor compared to other winters when weather included more winter storms and cold snaps. The winter of 2022/2023 had more heating degree days than average indicating slightly colder than normal (2 percent) weather in Nebraska.
In October 2022, OPEC+ announced a production cut of 2 million barrels per day. By the end of October, the Energy Information Administration (EIA) estimated U.S. distillate inventories were 104 million barrels, the lowest end-of-October level since 1951. Nebraska doesn’t have data from 1951, but distillate inventories were 467 thousand barrels which was the lowest end–of–October level in the last decade.
Nebraska’s distillate inventories were below the five–year range only during the month of October. Higher refinery runs and less consumption contributed to Nebraska distillate fuel inventories increasing during October, November, and December of 2022. U.S. distillate inventories were well below the five–year average through all of 2022 in all major trading regions globally, a situation largely related to reduced distillate exports from Russia and trade dislocations following Russia’s full–scale invasion of Ukraine in February 2022. In 2023, widespread refinery strikes in France further reduced global diesel supplies. Seasonal increases in demand and refinery closures affected inventories and contributed to price increases.
At the start of the winter heating season, the retail price of home heating oil in the United States and Nebraska climbed rapidly, establishing new records toward the beginning of November. The prices were higher than last year due to high wholesale prices and low imports. In December, crude oil prices rose above $100 per barrel after Russia’s further invasion into Ukraine. This didn’t impact Nebraska’s retail heating oil prices even though Nebraska’s wholesale heating oil prices increased. Retailers absorbed the wholesale increase rather than pass any of it along to their customers.
Nebraska’s stocks of propane started the season above the five-year range and steadily decreased through the winter staying in the middle of the five–year range with an inconsistent drop in December due to increased heating degree days.
The price of propane was flat and above the five–year (2018–2022) average throughout the heating season. This was probably due to Nebraska’s stock levels and the winter weather. In December, when stock levels decreased below the five–year range due to an increase in heating degree days, there was no change in the price of propane. In March 2023, U.S. propane exports reached a record high. There was no impact on Nebraska prices or stocks. Prices were still flat, and stocks were in the center of the five–year range. This was due to the winter season coming to an end.
Both retail propane prices and retail heating oil prices in the Midwest and Nebraska ended the winter heating season lower than in the last week of last year’s heating season.