The winter storm that tore into the Northeast also jolted natural gas prices across the continent and narrowed margins across the NGL spectrum.
Ethane recouped last week’s dip at Mont Belvieu, Texas, returning to more than 23 cents per gallon (gal) while holding steady at Conway, Kan. En*Vantage expects ethane prices to stabilize in coming weeks assuming no unexpected ethylene plant outages. This forecast derives from:
- Major first-quarter ethylene plant turnarounds are complete;
- Exports are expected to increase at Enterprise Products Partners’ Morgan’s Point, Texas, terminal; and
- With new ethylene capacity ready to ramp up, cracking demand should increase by 150,000bbl/d by the second quarter.
The higher demand in the short term will build the economics needed to cut into rejection in the Midcontinent and the Rockies by the second half of the year, En*Vantage forecasts.
Propane rose 7.3% at Mont Belvieu and 5.2% at Conway as exports of almost 1 million barrels per day (MMbbl/d) tightened balances. Exporters will need to pull from inventories to meet demand for the rest of the year if exports continue at this pace, En*Vantage said. As of a week ago, U.S. propane stocks were 16 MMbbl below inventory at this time in 2016.
Butane, which has tumbled since the beginning of March, was up slightly at both hubs. En*Vantage predicts that demand will increase as the cracking units come online later in the year as it is a preferred feedstock for ethylene.
Another blast of Arctic air from Canada is expected to sweep through the Midwest and Northeast this weekend. En*Vantage anticipates high withdrawal levels from U.S. natural gas inventories and notes that European gas storage is at only 28% of capacity, compared to 41% a year ago.
Storage of natural gas in the Lower 48 declined by 53 billion cubic feet (Bcf) in the week ended March 10, the EIA reported. The decrease, less than the Bloomberg consensus of 59 Bcf, resulted in a total of 2.242 trillion cubic feet (Tcf). The figure is 9.5% less than the 2.478 Tcf figure at the same time in 2016 and 21.4% above the five-year average of 1.847 Tcf.
Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.
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