Conway natural gas liquid (NGL) prices took a major downturn last week as the market seemed to balance out after being somewhat short on C5+ and ethane the previous week.

The downturn in prices the week of February 6 was somewhat surprising since heating demand was still strong as a result of colder-than-normal temperatures. In addition, heavy NGLs should have performed better since crude oil prices continued to hover around $100 per barrel (/bbl.).

Instead the C5+ price tumbled 8% to $2.34 per gallon (/gal), though this remained the second-highest price at the hub since April 2012. In reality, there was a sizable downturn in price from the previous week, but overall the price remains strong when compared to prices from the previous 12 months.

The same is somewhat true in the case of Conway ethane as it was down 13% to 24¢/gal. This was the second-highest price at the hub since March 2012. The good news is that frac spread margins remained positive despite a 59% decrease from the prior week.

Mont Belvieu ethane and C5+ performed in a much more expected way as ethane was down slightly at 2% to 25¢/gal from 26¢/gal the previous week while the C5+ price improved 1% to $2.36/gal. This was its highest price since it was $2.38/gal the week of April 11.

Natural gas prices also moved in opposite directions between the two hubs as the Conway price fell 2% to $3.22 per million Btu (/MMBtu) and the Mont Belvieu price improved 1% to $3.28/MMBtu.

Propane prices dipped at both hubs as the market remains oversupplied. In addition there were reports that some traders were selling off propane in advance of an expected downturn in heating demand as weather forecasts anticipate temperatures to normalize for the bulk of the remainder of winter in the Northeast while warming up slightly in parts of the Midwest and South.

The Mont Belvieu price decreased 2% to 85¢/gal, its lowest price in a month. This resulted in a 3% drop in margin. The Conway price dipped 1% to 80¢/gal, which was also its lowest price in a month. The Conway frac spread margin dropped 2% as a result of the downturn in gas prices. The Mont Belvieu margin fell 3%, primarily due to improved natural gas feedstock prices.

The theoretical NGL barrel fell at both hubs with the Conway price experiencing a larger decrease. The price fell 7% to $42.05/bbl. with a 9% drop in margin to $30.29/bbl. The Mont Belvieu price decreased 2% to $43.20/bbl. with a 3% drop in margin to $31.21/bbl.

The most valuable NGL to make at both hubs was C5+ at $1.98/gal at Conway and $2.00/gal at Mont Belvieu. This was followed, in order, by isobutane at $1.36/gal at Conway and $1.42/gal at Mont Belvieu; butane at $1.24/gal at Conway and $1.30/gal at Mont Belvieu; propane at 51¢/gal at Conway and 55¢/gal at Mont Belvieu; and ethane at 2¢/gal at Conway and 3¢/gal at Mont Belvieu.

Natural gas in storage for the week of February 8 decreased 157 billion cubic feet to 2.527 trillion cubic feet (Tcf) from 2.684 Tcf according to the Energy Information Administration. This was 10% below the 2.797 Tcf figure reported last year at the same time and 16% above the five-year average of 2.179 Tcf.

The National Weather Service’s forecast for this week anticipates that winter temperatures will be normal in the Northeast, much of the Midwest and parts of the Gulf Coast. Parts of the Southeast are expected to experience warmer-than-normal temperatures with the West Coast experiencing colder than normal temperatures for winter.

Contact the author, Frank Nieto, at fnieto@hartenergy.com

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