Improvements in crude prices helped push C5+ prices back over the $1 per gallon (/gal) threshold, but the rest of the NGL barrel (bbl) and natural gas prices retreated during the week of Jan. 28. However, the overall NGL bbl price held firm at both hubs.

West Texas Intermediate crude prices surpassed $50/bbl, the NGL bbl held firm at just under $21/bbl at both Mont Belvieu and Conway and natural gas prices fell to less than $2.50/MMBtu at both hubs. However, there were more positives than negatives for the week as even the large decrease in gas prices should result in improvements. Demand is expected to increase as the drop in gas prices is encouraging power generators to convert to natural gas from other energy sources while also increasing industrial demand.

According to PIRA Energy Group, improved demand is helping to rebalance the market. “Amid lower prices and a more competitive position in the fuels market, PIRA has increased its gas demand growth projection for 2015. The increases are led by a modest recovery in industrial use and a more competitive position for gas relative to coal. Add in higher stock injections, and we are looking at a relatively positive story on the demand side for the first time since 2010,” the company said in a research note.

The trend for ethane remains relatively strong as frac spread margins improved again after a down week and were positive at both hubs for the third straight week. Although the margins are thin, their outlook should continue to improve as continued rejection and increased cracking capacity help to work off excess storage and balance the market. However, if gas prices take a 180 degree turn anytime soon these efforts could be undone.

Despite colder temperatures and improved heating demand, gas prices are unlikely to experience this quick turnaround as the winter season has less than two months left with forecasts anticipating warmer temperatures. In addition, limited export demand is also undercutting gas price improvements.

The product with perhaps the biggest turnaround from last year is propane, which had record demand from both the home heating and LPG export markets. This year, heating demand isn’t as high, LPG export demand has dwindled significantly and there is a large storage overhang. The Mont Belvieu price is down by more than $1/gal from last year while the Conway price is off last year’s price by almost $2.40/gal.

It’s a staggering fall and it is expected prices will remain flat or possibly decrease further before it gets better as storage builds. This could be especially challenging to work off in the summer as demand is much lower during that season and is when storage is typically reloaded. Consequently lower prices may be necessary to encourage more LPG exports to Europe.

The most profitable NGL to make at both hubs was C5+ at 76 cents/gal at Conway and Mont Belvieu. This was followed, in order, by isobutane at 53 cents/gal at Conway and 43 cents/gal at Mont Belvieu; butane at 45 cents/gal at Conway and 41 cents/gal at Mont Belvieu; propane at 25 cents/gal at Conway and 27 cents/gal at Mont Belvieu; and ethane at 3 cents/gal at Conway and 2 cents/gal at Mont Belvieu.

Natural gas storage withdrawal levels are slowing down a bit as the U.S. Energy Information Administration reported a 115 billion cubic feet withdrawal for the week of Jan. 30, which put storage levels at 2.428 trillion cubic feet (Tcf). This was 24% higher than the 1.96 Tcf reported last year at the same time and 1% below the five-year average of 2.457 Tcf.

Storage withdrawals should be higher the week of Feb. 11 as the National Weather Service anticipates colder-than-normal temperatures along the East Coast into the Midwest and parts of the Gulf Coast. This will be somewhat balanced by warmer-than-normal temperatures along the West Coast.

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