The final full week of April saw NGL prices continue to perform on similar levels as last year, aside from propane, C5+ and Conway isobtuane. The propane market has improved from last year due to the increase of LPG export capacity as well as the need to rebuild storage levels following this very cold winter. Stronger crude prices have also helped keep C5+ prices at greater values than last year.

Propane prices fell 1% to $1.11 per gallon (/gal) at Mont Belvieu and 3% to $1.09/gal at Conway. This was the second straight week that Gulf Coast prices outpaced their Midcontinent counterpart. Although this would normally indicate a stronger decrease in demand from the Midcontinent, when you factor in the 21 cents/gal premium the product has compared to last year at the same time it is clear this isn’t the case.

It also appears there is an effort in the region to reload propane stocks as the Energy Information Administration (EIA) reported that they increased to 10.6 million barrels (MMbbl) in the Midwest on April 25, up from 9.7 MMbbl the previous week. This was still 1 MMbbl short of the stock level last year, but the speed of growth from the previous month is impressive as stock levels increased from 7.9 MMbbl the week of March 28.

Natural gas storage levels began to approach normal injection levels as the EIA reported that storage increased by 82 billion cubic feet (Bcf) to 981 Bcf the week of April 25 from 899 Bcf the previous week. This was 45% below the same time last year when storage was reported at 1.771 trillion cubic feet (Tcf) and 50% below the five-year average of 1.965 Tcf.

“Colossal storage deficits will make rebuilding storage far more difficult than any other time in the last decade,” the PIRA Energy Group said in a weekly research note. “This month’s year-on-year refills have been much slower than [our] earlier expectations, despite normal weather.” PIRA noted that transportation constraints out of the Northeast along with decreased Canadian gas imports and an increase in industrial demand is making rapid storage growth more difficult. Clearly greater injection levels will be needed to fully reload storage levels, although it should be noted that the five-year average represents a time when there was a large storage overhang.

Overall NGL prices were largely down from last week at both hubs. Conway isobutane prices continued to benefit from refinery turnarounds and experienced a 3% improvement to $1.86/gal, its highest price since it was $1.94/gal the week of Sept. 12, 2012. The Mont Belvieu fell 1% to $1.30/gal, indicating that the Conway price increase is only a local anomaly and not the signal of a stronger nationwide market for isobutane.

Indeed, the rest of the NGL bbl had similar prices at both hubs for the week with ethane trading at 30 cents/gal at Mont Belvieu and 26 cents/gal at Conway; butane trading at $1.27/gal at Mont Belvieu and $1.23/gal at Conway; and C5+ had the same $2.27/gal value at both hubs.

Ethane prices are currently struggling because of turnarounds at Williams’ Giesmar, La., LyondellBassell’s La Porte, Texas, and ExxonMobil’s Beaumont, Texas, crackers. These facilities represent approximately 112,000 bbl/d of cracking capacity. In addition, Dupont’s Orange, Texas, cracker is scheduled for maintenance and will take another 40,000 bbl/d of capacity offline.

However, En*Vantage continues to predict a short squeeze of ethane supplies by the middle of this summer once turnarounds are completed and new expansions increase cracking capacity to at least 1.5 MMbbl/d while ethane inventories are expected to be about 20 MMbbl.

“At that point, Mont Belvieu ethane prices will need to increase by about 15 cents/gal over its equivalent gas value to induce 150,000 bbl/d of rejected ethane to come to the market. We would still be a buyer of the backend of the ethane curve from July through December of this year based on our ethane balances and our forecast for tight ethane supplies for the second half of this year,” the company said in its Weekly Energy Report.

The theoretical NGL bbl had similar values with the Mont Belvieu price at $43.32/bbl following a 1% decrease with a 2% drop in margin to $25.97/bbl. The Conway price also fell 1% to $43.95/bbl with a 2% drop in margin to $27.07/bbl.

The most profitable NGL to make at both hubs was C5+ at $1.75/gal at Conway and $1.74/gal at Mont Belvieu. This was followed, in order, by isobutane at $1.40/gal at Conway and 83 cents/gal at Mont Belvieu; butane at 75 cents/gal at Conway and 77 cents/gal at Mont Belvieu; propane at 67 cents/gal at Conway and 68 cents/gal at Mont Belvieu; and ethane at negative 5 cents/gal at Conway and negative 2 cents/gal at Mont Belvieu.

Gas demand could increase in the coming week as the National Weather Service’s forecast indicates hotter-than-normal weather throughout the Northeast, Midwest and Gulf Coast.

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