While there was limited volatility, Conway E-P mix prices rose the first week of September due to increased activity out of the Aux Sable Channahon, Ill., NGL extraction and fractionation facility. This indicates that cheaper ethane is still finding a home among end-users. The most recent NGL extraction data from the U.S. Energy Information Administration (EIA) indicates that almost half of the increase in extraction levels was in the Upper Midwest for ethane.

This resulted in prices increasing 7% to 21 cents per gallon (/gal) at Conway, its highest price since it was 24 cents/gal the week of July 2. The Mont Belvieu price also experienced a slight uptick to 23 cents/gal, its highest price since it was 25 cents/gal the week of July 9.

While it may appear that the ethane market is gaining strength that is not the case—margins are negative throughout the country. In addition, the EIA’s recently announced ethane inventories for June came in higher than expected at nearly 38 million barrels (MMbbl).

“The June ethane inventory level represents an all-time high and there is a real possibility that ethane stocks could peak in October to 49.5 MMbbl unless ethylene plant turnarounds are delayed, expansions that have been delayed get completed earlier than expected and/or ethane rejection materially increases to about 400,000 bbl/d [barrels per day], from its current level of about 250,000 bbl/d,” En*Vantage said in its Sept. 3 Weekly Energy Report. The company now anticipates that domestic ethane cracking capacity could increase to 1.2 MMbbl by December, down from previous estimates that indicated this capacity would be reached in the fall.

The most striking thing when comparing current NGL prices to their levels last year at the same time is how similar ethane prices are between the two years. This marks three consecutive weak summers for ethane largely due to facility turnarounds. It will take some time for the storage overhang to be worked off, but there is hope that low prices, ample supplies and cracking capacity will entice the petrochemical industry to spur a run on these excess volumes.

Should this increased capacity spur a turnaround it would be similar to what occurred in the propane market for much of the past year as export terminals opened a new market for the product. Although propane prices have leveled off of late after a strong run in the winter caused by very high heating demand, this has once again been largely weather-driven due to a lack of cooling demand caused by a summer of moderate temperatures. Consequently propane inventories have been able to rebuild at lower prices with limited competition.

This is good news for utilities and power generators that shouldn’t have to pay high premiums or worry about limited supplies when the heating season begins, but the news isn’t as good for producers as the predicted surge in prices is unlikely to occur this coming winter unless temperatures approach levels seen this past winter.

Prices held firm at both hubs at $1.02/gal, a level similar to what they’ve been trading at for the past month at Mont Belvieu. However, it is the lowest price at Conway since the first week of June as storage has now refilled in the region.

WTI crude prices continue to linger at about $94/bbl with the market remaining largely stable. There are concerns over refinery turnarounds in the coming months, but refinery run rates have been at record levels and domestic supplies are at five-year lows which may support the high side.

Heavy NGL prices have trended much lower than their year-ago levels, resulting from the downturn in crude prices. However, butane rose 1% at both hubs as refiners are switching to winter-grade gasoline while isobutane prices held firm.

The theoretical NGL bbl price increased 1% at both hubs with the Conway price up to $39.63/bbl with a 3% improvement in margin to $25.86/bbl while the Mont Belvieu price rose to $39.85/bbl with a 2% gain in margin to $25.53/bbl.

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 99 cents/gal at Conway and 87 cents/gal at Mont Belvieu; butane at 84 cents/gal at Conway and 81 cents/gal at Mont Belvieu; propane at 67 cents/gal at Conway and 66 cents/gal at Mont Belvieu; and ethane at negative 4 cents/gal at Conway and negative 3 cents/gal at Mont Belvieu.

Natural gas storage levels continued to improve with solid injections as the latest data from the EIA reported a 79 billion cubic feet increase for the week of Aug. 29. This brought storage to 2.709 trillion cubic feet (Tcf) from 2.630 Tcf the previous week. Current storage levels are 15% below the 3.180 Tcf level reported last year at the same time and 15% below the five-year average of 3.204 Tcf.

There should be a reduction in cooling demand as the National Weather Service’s forecast anticipates normal late summer temperatures in the Northeast with much cooler-than-normal temperatures throughout the Midwest. Warmer-than-normal temperatures are expected along the West Coast, Gulf Coast and Southeast.

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