It might a sign of the times that folks who follow through on what they say are triggering reactions bordering on ecstasy.

A campaign promise to allow construction of the Keystone XL Pipeline that leads to an executive order doing just that? Let’s break open a Texas mickey! (Canadian slang for a three-liter bottle of alcohol.)

How about those OPEC countries sticking (by 90%) to their production cut agreement? Let’s keep WTI floating in the mid-$50s!

If that last reaction seems sub-ecstatic, it might relate to the cartel’s agreement-deficit disorder in previous production cuts. Then there is Julian Lee’s speculation in a recent Bloomberg article that the Saudis might be front-loading their cutbacks ahead of a production ramp-up in April-May to satisfy domestic oil demand for electric generation during the summer.

No matter the reason, the markets will not like a Saudi uptick, especially with U.S. crude inventories so high and a higher rig count in the shale plays.

Then there is the problem with natural gas prices, namely that the U.S. winter has been warmer than expected.

“The bottom line is that for gas bulls the winter appears to be essentially over and it is merely a matter on how bad the winter ends up,” wrote En*Vantage Inc. analysts. “Pretty bad, huh?”

The average prices for natural gas fell by 6.5% at the Chicago Citygate hub and by 7.2% at the Houston Ship Channel in the past four-day trading week. And, frac spread margins narrowed (except for Conway, Kan., propane) at the Conway and Mont Belvieu, Texas, hubs; so yes, pretty bad.

The hypothetical NGL barrel dropped 5.6% to below $30 per barrel (bbl) at Mont Belvieu and 5.9% to below $28/bbl at Conway. It was the sharpest one-week falloff at Mont Belvieu since late October 2016. Conway’s barrel has fallen 12.8% in the past two weeks to return to its range of December.

Ethane was roughed up at Conway, dropping 11.5% but remaining above 20 cents per gallon (gal). At Mont Belvieu, the decline was 2.5% but at 25.08 cents/gal was within 2 cents of the year’s high so far.

Propane’s slide has been steeper with an 11.8% drop at Mont Belvieu and 19.6% drop at Conway over the past two weeks. Propane has returned to its mid-January range at Mont Belvieu and mid-December level at Conway, when it was in the midst of a dramatic upward trend from sub-40 cents/gal at the start of September.

Normal butane dipped below $1/gal at Conway for the first time since early December. At Mont Belvieu the price slumped 8.4% in the past week but at $1.11/gal remained above $1/gal for the eighth time in the past nine weeks.

Isobutane is down almost 21% over the past two weeks at Mont Belvieu and more than 15.4% over the last three weeks at Conway. By comparison, the Mont Belvieu price is 78% above what it was 12 months ago and the Conway price is 83% higher. In comparison to two years ago, Mont Belvieu is 37% ahead and Conway is about 30% ahead.

Storage of natural gas in the Lower 48 declined by 89 billion cubic feet (Bcf) in the week ended Feb. 17, the U.S. Energy Information Administration reported. The decrease, above the Bloomberg consensus of 84 Bcf and En*Vantage’s revised estimate of 87 Bcf, resulted in a total of 2.356 Tcf. The figure is 10% less than the 2.617 Tcf figure at the same time in 2016 and 7.1% above the five-year average of 2.2 Tcf.

Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.

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