Ethane had a pretty good week, even if its sister NGL struggled.

The Mont Belvieu, Texas, price rose above 26 cents per gallon (gal) for the first time since late January and the margin widened by almost 5% last week to 8.55 cents/gal.

The January spike in ethane was tied to the blast of cold weather that drove natural gas prices skyward, En*Vantage said. Unlike that rise, the increase in ethane prices now is driven by demand, specifically new ethane crackers like Chevron Phillips Chemical Co. LP’s new Cedar Bayou facility in Baytown, Texas, and increased exports from Morgan’s Point on the Houston Ship Channel.

Also putting pressure on prices is that exports are restricted to Morgan’s Point while sinkholes in Pennsylvania keep the Mariner East 1 pipeline shut down. This week, Sunoco Pipeline LP, the unit of Energy Transfer Partners LP (NYSE: ETP) that operates the NGL pipe, relocated five families in Chester County, Pa., whose backyards were damaged by sinkholes that developed along the path of the pipeline, leaving the pipe exposed, Philly.com reported.

“The longer Mariner East 1 remains down, ethane exports from Morgan’s Point should stay high, further pulling ethane from storage at Mont Belvieu,” En*Vantage said.

The shutdown, once expected to be for 10 to 14 days, will now likely extend into May.

En*Vantage has been projecting ethane at 30 cents/gal by mid-year and 35 cents/gal by year-end, and it says that fundamentals continue to support that forecast. Ethane cracking demand is expected to increase by about 200,000 barrels per day (Mbbl/d) between March and September while inventories decrease.

By the end of the third quarter, ethane inventories could slip below 40 million barrels, or less than a 25-day supply. Historically, that level of storage has bumped ethane’s frac spread into the range of 10 to 15 cents/gal, En*Vantage said.

The elevation of crude oil prices, spurred by the nomination of Mike Pompeo to secretary of state and appointment of John Bolton to national security adviser, eased. Traders were concerned about the impact of possible sanctions renewed against Iran and more sanctions against Venezuela as a more hawkish national security team took shape.

However, Venezuela’s oil industry is engaged in a swift downward spiral even without added sanctions. What could have hurt even more, a scheduled maintenance shutdown of the Petromonagas oil upgrader in the country’s Orinoco Belt, was delayed until at least July because delivery of equipment and material, ordered by joint venture partner Rosneft, was put off.

The upgrader produces diluent for Venezuela’s heavy oil. The need for imports of naphtha during its shutdown could provide a boost to natural gasoline prices, En*Vantage said.

In the week ended March 30, storage of natural gas in the Lower 48 experienced a decrease of 29 billion cubic feet (Bcf), compared to the Bloomberg consensus forecast of 27 Bcf, the U.S. Energy Information Administration reported. The figure resulted in a reclassified total of 1.354 trillion cubic feet (Tcf). That is 34% below the 2.051 Tcf figure at the same time in 2017 and 20.4% below the five-year average of 1.701 Tcf.

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

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