Heavy natural gas liquid (NGL) prices showed the greatest movements — both positive and negative — of any NGLs as November ended. Pentanes-plus (C5+) finally caught up with West Texas Intermediate crude oil prices as the month came to a close. For the previous month, crude prices traded at just under $100 per barrel (bbl.), but heavy NGL prices hadn’t matched these movements.

While C5+ prices rose to their highest levels in more than a month, as they increased to $2.07 per gallon at Conway and $2.13 per gallon at Mont Belvieu, butane and isobutane took downturns at both hubs primarily due to more competition with condensate prices.

Butane fell 3% to $1.39 per gallon at Mont Belvieu and dropped 4% to $1.37 per gallon at Conway. Both prices were the lowest at the hubs since they were the same level the week of September 25. Isobutane prices decreased at a similar rate as their sister products at both hubs with the Mont Belvieu price also dropping 3% to $1.42 per gallon and the Conway price falling 5% to $1.37 per gallon.

Despite the downturn, both sets of prices are among the highest for the products at both hubs this year as demand remains strong due to increased liquefied petroleum gas (LPG) exports and consistent winter-grade gasoline production.

Although heavy NGLs were a mixed bag at both hubs, light NGL prices held firm. This was a positive for propane as its price levels are at their highest in the past two years, but a negative for ethane as prices still struggle to get anywhere near truly profitable frac spread margins.

Mont Belvieu propane rose 1% to $1.20 per gallon, its highest level since it was $1.21 per gallon the week of April 11, 2012. The Conway price didn’t achieve these same heights as it rose slightly to $1.20 per gallon, the same range it has been at for the past month. Increased propane heating demand should help to make up for the end of the crop drying season.

Ethane prices benefitted from improved gas prices at both hubs, but still remained very low. The Mont Belvieu price rose 1% to $0.26 per gallon, which is the range it has traded at for much of the second-half of 2013. The Conway price was flat at $0.18 per gallon with low volatility as most of the industry is avoiding the hub due to increased transportation options.

The short-term outlook for ethane looks pretty bleak as the improvement in gas prices has kept margins thin. Ethane is in a no-win situation as prices increase when gas prices also do, but they have failed to pick up at such a rate as to turn margins positive. On the other hand, they have also followed gas prices when they have fallen and thus failed to take advantage of potential gains in margin.

This should start to turnaround in March as inventories should begin to fall, which could help prices make notable improvements. En*Vantage is forecasting that Mont Belvieu ethane prices could approach $0.30 per gallon by March, which would provide a positive return under current market conditions.

All told the theoretical NGL bbl. price was down at both hubs as the Conway price dropped 1% to $42.08 per bbl. with a slight decrease in margin to $28.16 per bbl. The Mont Belvieu bbl. price was flat at $43.82 per bbl. with a slight increase in margin to $29.86 per bbl.

The most profitable NGL to make at both hubs was C5+ at $1.71 per gallon at Mont Belvieu and $1.64 per gallon at Conway. This was followed, in order, by isobutane at $1.04 per gallon at Mont Belvieu and $0.99 per gallon at Conway; butane at $0.99 per gallon at Mont Belvieu and $0.97 per gallon at Conway; propane at $0.85 per gallon at both hubs; and ethane at $0.01 per gallon at Mont Belvieu and negative $0.07 per gallon at Conway.

The recent cold front in the Northeast caused natural gas storage levels to fall 162 billion cubic feet to 3.614 trillion cubic feet (Tcf) from 3.776 Tcf the previous week. This was 5% below the level of 3.814 Tcf posted last year at the same time and 3% below the five-year average of 3.718 Tcf.

There could be another sizable decrease in storage levels this week as the National Weather Service anticipates a cold front that will extend throughout most of the country with only the West Coast and Florida experiencing normal to slightly warmer temperatures.

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