Propane is a three-carbon alkane derived from other petroleum products during oil or natural gas processing. It is commonly used as a heat source for engines, barbecues, and homes. Its name was derived from propionic acid.
Propane is a by-product of natural gas processing and oil refining. U.S. demand is approximately one-third that of heating oil. Propane is used in diverse markets: residential cooking, crop-drying in agriculture, space heating in homes and industry, in motor vehicles and as a feedstock for the production of vital petrochemicals. Natural gas utilities often store propane for use during periods of peak demand.
The NYMEX Division propane contract trades in units of 42,000 gallons (1,000 barrels). It provides an effective pricing and risk management tool for the gas liquids sector of the energy industry. The contract is a natural complement to the NYMEX Division crude oil, heating oil, gasoline, and natural gas futures contracts.