There was an upswing in commodity prices as the summer drew to a close due to a combination of cooling and refining demand. These were caused by a late heat wave in the Northeast that increased cooling demand as well as the switch from summer- grade to winter-grade gasoline.

This resulted in all natural gas liquid (NGL) prices increasing at both Conway, Kansas, and Mont Belvieu, Texas. Unfortunately it also resulted in an increase for natural gas prices at both hubs, which resulted in frac spread margins growing thinner throughout the month of August.

The price of natural gas rose 8% to $3.54 per million Btu (MMBtu) at Conway and 6% to $3.58 per MMBtu at Mont Belvieu. Prices increased after gas began to displace coal at various power plants throughout the country. As demand for gas has increased, it has resulted in storage levels getting worked out.

The price of ethane rose 2% to 22¢ per gallon (gallon) at Conway and 6% to 26¢ per gallon at Mont Belvieu. Despite this increase, the simultaneous growth in gas prices has caused frac spread margins to decrease. The Conway margin fell from nil to negative 2¢ per gallon Since the margin has been so thin, any change has a significant impact on the percentage changes, as reflected in the frac spread chart. The Mont Belvieu margin was down slightly to 3¢ per gallon.

Propane prices continued to increase in August due to liquefied petroleum gas export demand and an anticipation from traders that a normalized winter season will increase heating demand. It is expected storage levels will continue to fall the rest of the year to below the five-year average by year-end. The Conway price rose 26% from 92¢ per gallon to $1.15 per gallon, and the Mont Belvieu price rose 22% to $1.17 per gallon from 96¢ per gallon These price increases caused margins to increase significantly, 34% at Conway and 29% at Mont Belvieu.

Heavy NGL prices were up at both hubs, aside from Conway isobutane, which experienced a slight reduction in both price and margin in the month due to a market correction as ONEOK’s isomerization unit came back online. For much of the summer, Conway isobutane prices have run high and outpaced Mont Belvieu, which is unusual.

However as the month came to a close, prices decreased slightly to $1.07 per gallon, which resulted in a 1% decrease in margin. Conversely, the Mont Belvieu price rose 7% to $1.43 per gallon due to Enterprise Products Partners taking its 116,000 bbl. per-day isomerization unit in the region down for the maintenance. This facility is the largest in the country and had a significant impact on the market.

Pentanes-plus grew in August as there was uncertainty about global crude oil supplies due to the possibility of U.S. intervention in Syria. By September, these fears had lessened and prices began to decrease.

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