Conway NGL prices took a downturn the week of Sept. 17, although prices largely held firm during the past two months as demand plateaued. The positive to take from this is that prices seem to have hit their bottom as supply overhangs are not causing large price decreases during this injection season that has had limited cooling demand.

In fact, the NGL with the largest downturn at both hubs was C5+, which fell in value due to the decline in West Texas Intermediate (WTI) crude oil prices to less than $93 per barrel (/bbl). The primary reason for the downturn in WTI prices, and in Brent prices, is the increased production out of Africa and the Middle East. Should crude prices continue to fall, demand for refined product exports could also decline.

As it was, C5+ values have fallen to their lowest levels this year with the Mont Belvieu price of $2.03 per gallon (/gal) being the lowest since it was $1.98/gal the week of June 26, 2013, while the Conway price of $1.96/gal was the lowest at the hub since the week of Nov. 6, 2013, when it was the same price.

Ethane prices also remained challenged as a result of ethylene plant turnarounds that have left the U.S. with less than 90% of total capacity. The full domestic cracking capacity of 1.2 million barrels per day (MMbbl/d) is not expected to be online until this winter—either in November or December. In the meantime, ethane can be expected to struggle at the current weak prices and margins. The Mont Belvieu ethane price increased 1% to 24 cents/gal, its highest price since mid-July when it was 25 cents/gal. The Conway price fell 5% to 22 cents/gal, the lowest it has been in a month.

Margins remained firmly negative despite a 4% downturn in gas prices that helped support improvements. The Mont Belvieu ethane margin rose 40%, but was still negative 2 cents/gal. The Conway margin fell another 2% to push it down to negative 3 cents/gal.

Despite decreasing at both hubs, propane prices are performing strongly. The Conway price fell 2% to $1.06/gal, but this was still its second-highest price since the week of July 16. This is even more impressive when considering that storage has been filled to capacity ahead of this winter and crop-drying season. The Mont Belvieu propane price fell very slightly to $1.08/gal despite the U.S. Energy Information Administration (EIA) reporting that inventory levels were higher-than-anticipated the week of Sept. 15 as LPG exports are helping to balance the market.

The theoretical NGL bbl price fell 1% at Mont Belvieu to $40.41/bbl with a 2% gain in margin to $26.16/bbl as a result of improved ethane margins. The Conway bbl price decreased 2% to $39.90/bbl with a 1% decrease in margin to $26.24/bbl.

Despite its price drop, the most profitable NGL to make at both hubs remained C5+ at $1.55/gal at Conway and $1.60/gal at Mont Belvieu. This was followed, in order, by isobutane at $1.01/gal at Conway and 90 cents/gal at Mont Belvieu; butane at 87 cents/gal at both hubs; propane at 72 cents/gal at both hubs; and ethane at negative 3 cents/gal at Conway and negative 2 cents/gal at Mont Belvieu.

Natural gas storage levels rose at the same rate they have been for much of the past month as the EIA reported a 97 billion cubic feet injection the week of Sept. 19. This pushed the inventory level to 2.988 trillion cubic feet (Tcf) up from 2.891 Tcf the previous week, which was 11% below the 3.374 Tcf reported last year at the same time and 13% below the five-year average of 3.414 Tcf.

The National Weather Service’s forecast for the first week of October anticipates warmer-than-normal temperatures throughout the Eastern half of the country, including the Eastern Seaboard, Gulf Coast, and parts of the Midwest. While this may increase cooling demand, it is unlikely to have a noticeable impact on gas storage levels.

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