Crude prices continue to crumble as West Texas Intermediate (WTI) traded in the $30 per barrel (/bbl) range the week of Jan. 6. The outlook for WTI remains is becoming gloomier as well with Barclays Capital lowering its forecast for prices from $56/bbl to $37/bbl.

“Global macroeconomic concerns are mounting, warm weather deleted the seasonal uptick in oil demand, OPEC supplies are rising especially with Iran’s [quicker] return, and non-OPEC supply is not adjusting fast enough, meaning that there is still further downside risk to prices this quarter,” the investment firm said in a Jan. 14 research note.

Barclays added that there could be price spikes in the first quarter due to geopolitical events, as well any delays in Iranian crude’s return to the global market. However, the investment firm said these would be short-lived as market fundamentals do not currently support a sustained rally.

While WTI has been falling rapidly, it is likely approaching the bottom, according to En*Vantage. In its Jan. 14 Weekly Energy Report, the company said this floor could in the $20/bbl range, which is below the profitability level for most producers.

The WTI depreciation resulted in large decreases in C5+ prices, which fell more than 10% at both Conway and Mont Belvieu. The Midcontinent price was down 14% to 77 cents per gallon (/gal), its lowest price since it was 69 cents/gal the week of Dec. 3, 2008. The Gulf Coast price fell 13% to 79 cents/gal, its lowest level since it was 78 cents/gal the week of Jan. 1, 2009. Both hubs also experienced sizable decreases for the other two heavy NGL prices as butane and isobutane fell to their lowest levels in the past year.

Propane prices also fell at both hubs despite increased heating demand that resulted in nearly 4.5 million bbl being withdrawn from storage. However, inventories are still at record high levels and LPG export demand is lessening. Frac spread margins still remain positive, but are at their lowest level in years at 11 cents/gal at Conway and 14 cents/gal at Mont Belvieu.

The lone bright spot, if you can call it that, for commodity prices was the improvement in the ethane market. Prices were up at both hubs with a 3% gain at Mont Belvieu to 16 cents/gal and a 2% gain to 15 cents/gal at Conway.

The theoretical NGL bbl price fell 10% at both hubs with the Conway price down to $15.27/bbl with a 16% drop in margin to $7.34/bbl while the Mont Belvieu price was down to $15.96/bbl with an 18% decline in margin to $7.74/bbl.

The most profitable NGL to make at both hubs was C5+ at 53 cents/gal at Conway and 54 cents/gal at Mont Belvieu. This was followed, in order, by isobutane at 34 cents/gal at Conway and 29 cents/gal at Mont Belvieu; butane at 26 cents/gal at Conway and 28 cents/gal at Mont Belvieu; propane at 11 cents/gal at Conway and 14 cents/gal at Mont Belvieu; and ethane at nil at Conway and 1 cent/gal at Mont Belvieu.

The widespread cold weather in the Northeast and Midwest caused the largest natural gas withdrawal from storage this season as the U.S. Energy Information Administration reported stocks falling by 168 billion cubic feet the week of Jan. 8. This reduced storage levels to 3.475 trillion cubic feet (Tcf) from 3.643 Tcf the previous week, which was 20% greater than the 2.888 Tcf posted last year and 16% greater than the five-year average of 3.001 Tcf.

The National Weather Service’s forecast for the week of Jan. 20 anticipates warmer-than-normal temperatures throughout much of the country, which will greatly reduce heating demand.

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