While falling in value the week of May 15, natural gas liquid (NGL) prices also saw a return to normalcy as isobutane had a higher value than butane and Mont Belvieu C5+ rose above its Conway counterpart for the first time in three months.

The Mont Belvieu C5+ price fell 2% to $2.06 per gallon (/gal), which was about the same value it had two weeks ago. The Conway price decreased 4% to $2.03/gal, its lowest level since it was $1.96/gal the week of October 3, 2012.

The good news, in the midst of falling prices, is that heavy NGL valuations relative to crude prices may have reached the bottom, according to En*Vantage. However, the company doesn’t anticipate material improvement due to summer gasoline Reid Vapor Pressure specifications and lower gasoline demand. In short, “more exports are needed to boost butane and natural gasoline prices,” the company said in its Weekly Energy Report for May 23.

Isobutane was the lone NGL to experience a price increase at both hubs this week as it rose 3% to $1.18/gal at Conway and was up slightly to $1.26/gal at Mont Belvieu. This wasn’t a sign of strength so much as it was the market rebalancing after isobutane tumbled strongly at both hubs the first week of May. Isobutane prices have slumped not only because of the decreased demand from refiners, but because of increased production from processing plants.

Butane moved in opposite directions at the hubs this week. The Mont Belvieu price increased 2% to $1.26/gal, its highest price in a month; while the Conway price dropped 1% to $1.16/gal. Unlike the other two heavy NGLs, butane was able to perform in a relatively strong manner the past month due to increased butane cracking that En*Vantage estimated at 80,000 barrels (bbl.) per day.

Conway ethane had the largest price drop of any NGL at 4% due to limited cracking demand levels caused by ethane cracker outages, which reduced demand by more than 100,000 bbl. per day, with some reports going as high as 120,000 bbl. per day. While Mont Belvieu prices only experienced a slight dip, Conway E-P mix remains extremely fragile due to limited transportation capacity and demand.

The Conway price of 21¢/gal was the lowest at the hub since it was 19¢/gal the week of April 17. The Mont Belvieu price of 28¢/gal was down very slightly from the previous week’s price.

Propane export demand remains solid, but ethane cracker outages reduced domestic demand, which combined with the lack of heating demand, caused stock levels to increase this week. As a result, both Conway and Mont Belvieu propane prices fell 1%. The Mont Belvieu price of 94¢/gal was the lowest it has been since it was 92¢/gal the week of April 3. The Conway price of 88¢/gal was the second-highest it has been in a month.

Frac spread margins tumbled in all but two cases at both hubs due to the combination of 4% price gains for natural gas and price decreases at Conway and Mont Belvieu. The only exceptions to this rule were Mont Belvieu butane and Conway isobutane, which each increased 2%.

The theoretical NGL bbl. price fell 2% at Conway to $36.94/bbl. with a 6% drop in margin to $22.36/bbl. while the Mont Belvieu bbl. price dropped 1% to $39.41/bbl. with a 3% drop in margin to $24.47/bbl.

The most profitable NGL to make at both hubs was C5+ at $1.59/gal at Conway and $1.60/gal at Mont Belvieu. This was followed, in order, by isobutane at 78¢/gal at Conway and 85¢/gal at Mont Belvieu; butane at 74¢/gal at Conway and 83¢/gal at Mont Belvieu; propane at 52¢/gal at Conway and 57¢/gal at Mont Belvieu; and ethane at negative 6¢/gal at Conway and 1¢/gal at Mont Belvieu.

Natural gas prices should remain relatively healthy and in the $4.00 per million Btu range as we head into June based on slower storage injection levels and the weather forecast. According to the Energy Information Administration, natural gas storage levels rose 89 billion cubic feet to 2.053 trillion cubic feet (Tcf) the week of May 17 from 1.964 Tcf the previous week. This was 25% below the 2.733 Tcf figure posted last year at the same time and 4% below the five-year average of 2.137 Tcf.

The National Weather Service’s forecast for this week anticipates warmer-than-normal temperatures throughout the East Coast and Midwest down to the Gulf Coast. Somewhat countering this increase in cooling demand will be the cooler-than-normal weather anticipated along the West Coast.

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