As the summer of 2014 draws to a close, NGL prices continued to return to levels from last summer with the only real discrepancies being higher Conway propane prices and lower Mont Belvieu isobutane prices this year.

The propane price increase is a result of strong winter heating demand in the Midcontinent. The market is in the midst of reloading a storage deficit, which has kept prices elevated above their average levels for much of this year.

The Conway price rose 1% to $1.05 per gallon (/gal) as the region is offering price premiums to attract volumes. According to En*Vantage, propane imports more than doubled the first week of August to 115,000 barrels per day (bbl/d) with the Midwest accounting for 84,000 bbl/d.

“Current Midcontinent propane inventories are at 23.43 million bbl [MMbbl], 1.91 MMbbl above year ago levels and 1.62 MMbbl below the five-year average for the corresponding week. Midcontinent propane inventory levels are now 1.91 MMbbl above the five-year low for this time of year. Inventories should continue to rise, peaking at around 27.7 MMbbl by early October and ending around 26.9 MMbbl by Oct. 31, 78,000 bbl above the five-year average level for that time of year,” the firm said in its Weekly Energy Report for Aug. 14.

Mont Belvieu propane prices also rose 1% to $1.02/gal, but are weakening as inventories rose above their normal levels for the first time this year while LPG exports have leveled off and demand from Asia and Europe has slowed. Demand should increase in the fall due to the expected strong crop-drying season.

Ethane prices continued to struggle as a result of cracker outages that have caused inventory levels to build at a fast pace. The Mont Belvieu price fell 4% to 22 cents/gal while the Conway price held firm at 19 cents/gal. Margins remain negative throughout the country with rejection the status quo. There is good news on the horizon as cracking capacity has increased by 100,000 bbl/d in the past month according to En*Vantage. Only two plants remain offline; however, they are two of the industry’s most important: Chevron Phillips Chemical Co.’s Port Arthur, Texas, facility and The Williams Cos. Inc.’s Geismar, La., facility. These plants should increase national cracking capacity by 200,000 bbl/d once they are brought back into service this fall.

Over the past month, crude prices hit their lowest levels for the year in the mid-$90/bbl range as demand has remained flat. In addition, the Cushing, Okla., bottleneck is easing up as crude stock levels fell below 20 MMbbl in July for the first time since 2008. There are indications that Brent crude could improve as supplies out of Iraq, Libya and Nigeria may be limited in the months ahead due to political instability and the outbreak of Ebola.

Heavy NGL prices trended downward at Conway with isobutane in particular returning to normal levels after trading at premiums for most of the year. Prices had begun to stabilize for several weeks before running back up in July. It was assumed that this was tied to ONEOK’s isomerization (iso) unit in the Midcontinent being offline, but company officials confirmed that it was still in operation. It appears that the run-up may be tied to a fire in an iso unit at CVR Refining LP’s Coffeyville, Kan., refinery, which has taken the facility offline. Conway prices were driven up earlier this summer when BP Plc’s Whiting, Ind., refinery was undergoing maintenance, which limited iso capacity in the region.

This week there was a 6% downturn in the Conway price to $1.33/gal, which is actually below the year ago price of $1.38/gal. The Mont Belvieu price was up slightly to $1.28/gal after experiencing a 4 cents/gal decrease last week. It is possible that another short-term run-up in prices may occur before the end of summer, but prices are expected to fall to their normal levels as iso gasoline blending stops with refiners switching to winter-grade gasoline.

This switch by refiners should support butane prices as butane is used in winter-grade gasoline blending. Both hubs experienced a 2% price increase with the Conway price up to $1.23/gal and the Mont Belvieu price up to $1.22/gal. Both prices are below their level last year at the same time.

The most profitable NGL to make at both hubs remained C5+ at $1.65/gal at Conway and $1.68/gal at Mont Belvieu. This was followed, in order, by isobutane at 96 cents/gal at Conway and 89 cents/gal at Mont Belvieu; butane at 84 cents/gal at Conway and 82 cents/gal at Mont Belvieu; propane at 70 cents/gal at Conway and 66 cents/gal at Mont Belvieu; and ethane at negative 7 cents/gal at Conway and negative 4 cents/gal at Mont Belvieu.

Natural gas storage levels continue to catch up to their one-year and five-year levels due to lessened cooling demand this summer. The U.S. Energy Information Administration reported that storage increased by 78 billion cubic feet to 2.467 trillion cubic feet (Tcf) from 2.389 Tcf. This was 18% below the 2.997 Tcf posted last year at the same time and 19% below the five-year average of 3.042 Tcf. While it’s been a cool summer, cooling demand should increase this coming week as the National Weather Service anticipates warmer-than-normal temperatures throughout much of the country.

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