Propane Inventories Fall
Propane inventories in the U.S. fell by 1.5 million barrels last week to 52.5 million. The largest draw of 1.1 million barrels occurred in the Gulf Coast region. The Midwest regional stocks fell by 0.5 million barrels and the Rock Mountain/West Coast region drew slightly. The East Cost regional stocks built by 0.1 million barrels.

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Residential Propane Prices Increase

The average residential propane price rose 2.7 cents per gallon to reach 224.0 cents per gallon. This was a decrease of 20.3 cents per gallon compared to the 244.3 cents per gallon average from the same period last year. Wholesale propane prices dropped 2.1 cents per gallon, from 119.1 cents per gallon to 117.0 cents per gallon. This was an increase of 32.8 cents per gallon when compared to the November 17, 2008 price of 84.2 cents per gallon.

Propane Inventories Experience Large Drop
After reaching an 11-year high in October, inventories of propane settled in the lower half of the average range for this time of year, as seasonal demand increases. Total U.S. propane inventories fell by 2.9 million barrels to 65.5 million barrels. The Midwest regional stocks drew 1.6 million barrels and the Gulf Coast region drew 1.4 million barrels. The Rocky Mountain/ West Coast region drew 0.1 million barrels of inventory and the East Coast regional stocks experienced a build of 0.2 million barrels. Propylene non-fuel use inventories increased their share of total propane/propylene inventories from 3.3 percent to 3.4 percent.

Tank Nanny – Propane Transportation Safety Device The Tanknanny® is here! Traveling with propane can be unnerving, but no longer do you have to worry about the safety of yourself and others when you take the trip to refill your propane. No more rolling or tipping tanks in the back of your car or pickup, and no dirt or rust stains on the interior of your car!

Barbecue season is soon upon us. The moment I think of that I can smell the burgers and dogs grilling. Hanging out with friends and family on a summer day around a BBQ is a wonderful thing. Something that is not so wonderful is going back and forth with a propane gas tank to return the empty and pick up a full one. Whether you go to a propane refill station or use a propane tank exchange, it is a hassle. I’ve recently have come across something that will make it easier and safer to transport your propane gas tank. It’s called the Tank Nanny.

How many times have you driven around with the tank in your car and it’s rolling around knocking against the inside of your car? We have all tried various ways to keep the tank from moving about. I have usually tried to jamb it between the front and back seat, but even still it tends to get loose. Trying to wedge it in the back of the SUV does work either. Plus after we have used the tank, it’s dirty and maybe has a little rust on it. You don’t want that mess in the car.

The tank nanny is a safer way of transporting propane tanks. Instead of having that tank roll around inside your car, this will hold the tank securely in place. This is accomplished by the simple design of this product. Picture a large bowl. Your propane tank fits snugly inside of the bowl area. Here is the best part; it has a piece where you can run the seat belt through it, thus using the seat belt to secure it to your seat. No more worries about the tank rolling around and messing up the interior of your car.

The Tank Nanny weighs around 4 pounds so it’s very light to use and move around with. It is made of recycled plastic and comes in several colors for those of you who like to match your car. No special tools are need at all. Simply place on your car seat and belt it in like a child. It could also be used in the trunk of you car or in the cargo area of your SUV. As long as you have a flat surface to place it on, you should be good to go.

When not in use, you can leave it in the trunk or cargo area and use it to hold groceries, water bottles or anything else that is back there and rolls around.

The Tank Nanny goes for around $20. That’s a cheap insurance to prevent a propane tank from rolling around your car. You can easily find it online and have it to use in just a few days. Just in time for the first BBQ.

When these events take place, you will see natural gas prices move quite a bit. An investor or speculator might want to trade this market. There are several ways to trade natural gas. One way would be to trade natural gas futures on the New York Mercantile Exchange. Natural gas futures trading can be very risky. You only have to put up 5% margin in order to trade it. This gives you tremendous leverage, but remember, leverage cuts both ways. If you put up 5% margin and the price of natural gas increases 5%, you’ve doubled your money. On the other hand, if prices decrease 5%, you’ve just been wiped out. Natural gas futures trading can be profitable, but it will take nerves of steel and dedication to following this market.

Another way to trade natural gas would be buying stock in individual natural gas companies. In this case you may be putting all of your money in one basket if you select just 1 or 2 stocks. This will take plenty or research on your part to find the right companies to invest in. Do you want to invest in natural gas exploration and drillers, or do you want to invest in natural gas pipeline owners? Do you only want to invest in natural gas stocks that pay a dividend? These are choices you have to make before investing.

This brings us to natural gas ETFs. ETF stands for exchange traded fund. ETFs have become very popular over the last several years. Not only can you trade a natural gas ETF, but you can find ETFs for other physical commodities too.

You can find a natural gas ETF like the United States Natural Gas Fund, LP, ticker symbol UNG which only trades natural gas futures (more on that later). The UNG fund is very focused and specific on what is in the fund. An example of a fund that will have many stocks and component to it is the SPDR S&P Oil& Gas Exploration & Production Fund, ticker symbol XOP. This energy ETF will invest in the index of stocks of companies that are involved in the production and exploration of natural gas.

Now you may ask yourself why not just invest in a natural gas mutual fund? You certainly can, and there are good ones out there, but you will need to consider a few things before investing.

With mutual funds, you will need to know what stocks are in that fund. Is that mutual fund focused on a specific sector of natural gas, or is it a catch all for anything natural gas related?

What about the expense ratio of a natural gas mutual fund? This is something most investors overlook when buying into a fund. There are some funds that charge over 1% to be in their funds. That can be an enormous drag on your performance. Is there a minimum time to hold that mutual fund? Some mutual fund companies will place restrictions on how often you can move in and out of the fund, while other will charge you a fee if you redeem it in 30 or 60 after first buying into it. They do this to stop investors from day trading the mutual fund, but what if you need to get your money out for an emergency? What about trying to sell your shares during the day? With a mutual fund, you can only buy and sell at the closing net asset value of the stock each night.

ETFs can look like a mutual fund by investing in several different companies in a sector. Where an ETF differ from a mutual fund is in the way you can trade it. No matter which natural gas ETF you invest in, you can trade it like a regular listed stock. You can buy and sell it throughout the day, unlike mutual funds where you can only get one price. ETFs can become a vehicle for day traders. Another advantage of a gas ETF is that you can place stop limit orders on it. If there is news that will adversely affect the price of your ETF, you can place a sell stop order that will immediately liquidate your position when it hits your price. If you invested in a mutual fund, you couldn’t get out until the end of the day. There would be nothing you can do as you watch the value of your natural gas mutual fund erodes.

The United States Natural Gas Fund, LP (UNG)

This is by far the most popular natural gas ETF. This fund invests solely in the front month natural gas futures contract on the New York Mercantile Exchange. The natural gas futures on NYMEX are the mostly widely traded and liquid market for Nat gas futures. This fund will attempt to match the daily price returns of the underlying futures contract. You are essentially trading natural gas future but with a twist. The fund DOES NOT use leverage when investing in futures. This will help protect the fund from wild swings due to leverage. As the month ends, the fund will then start to “roll” out of the front month futures contract before it expires and will “roll” in to the next month futures contract. This is a long only fund. So if you are bullish on natural gas prices, this may be a fund you should look into.