Mont Belvieu and Conway natural gas liquid (NGL) prices continued to approach parity in several cases the third week of May. The most notable of these were ethane, propane and C5+.

Only butane and isobutane, which are heavily used by refiners, continue to have a notable price differential between the two hubs. This differential is continuing because of the Gulf Coast’s stronger refining market.

Butane prices rose 1% at Conway to $1.17/gal, its second-lowest price since it was $1.08/gal the week of August 1, 2012. The Mont Belvieu price was down very slightly to $1.23/gal, which was the hub’s second-lowest price since it was $1.20/gal the week of June 27.

Conway isobutane remained below the price of butane at the hub for the second straight week after it fell another 1% to $1.14/gal, its lowest price since it was $1.12/gal the week of September 9, 2009. The Mont Belvieu price rose very slightly to $1.26/gal.

Ethane prices continued to detach from West Texas Intermediate (WTI) crude prices, but remained more tied to natural gas prices, which dropped in value. The value of ethane fell 2% to 22¢ per gallon (/gal) at Conway, which is within the average price for the previous four weeks. At the same time natural gas prices largely held firm at the hub at $3.83 per million Btu (/MMBtu). The Mont Belvieu ethane price dropped 3% to 28¢/gal, its lowest price in two months. The hub’s natural gas price fell 1% to $3.95/MMBtu.

Ethane will continue to be the lone natural gas liquid (NGL) have a closer correlation with natural gas than WTI crude prices until storage levels drop. According to En*Vantage, ethane storage levels need to fall below the 28 days-of-supply before it attains a tight relationship with crude.

Differentials for propane prices are narrowing at the two hubs because of increased demand from the domestic and international petrochemical markets. Prior to Kinder Morgan’s Cochin pipeline adding the capability to transport E-P mix out of the Midcontinent to Sarnia, Canada, these volumes were frequently left to the whims of heating demand. The addition of a new market, along with a cold winter, has helped drive supply levels in the region down to five-year lows.

This same supply level has also been attained in the Gulf Coast due to Enterprise Products Partners increasing capacity at its liquefied petroleum gas (LPG) export facilities. Mont Belvieu propane increased in value by 1% to 95¢/gal, its second-highest price this year. The Conway price rose 2% to 89¢/gal, its highest price in six weeks.

WTI crude prices remained at about $95 per barrel (/bbl.) during the week, which resulted in C5+ prices increasing 2% at both hubs. The Mont Belvieu price of $2.10/gal was the highest since the week of March 27 when it was $2.16/gal. The Conway price was $2.11/gal, its second-lowest price of the year. This was the 12th consecutive week that the Midcontinent price was greater than its Gulf Coast counterpart, but it was the closest the differential has been during that time.

These prices resulted in the NGL bbl. gained 1% at both hubs with the Conway price improving to $37.67/bbl. with a 2% gain in margin to $23.68/bbl. Meanwhile, the Mont Belvieu price increased to $39.63/bbl. with a 1% margin improvement to $25.20/bbl.

The most profitable NGL to make at both hubs was C5+ at $1.69/gal at Conway and $1.66/gal at Mont Belvieu. This was followed by butane at 77¢/gal at Conway and isobutane at 86¢/gal at Mont Belvieu. The third most profitable NGL to make at Conway was isobutane at 76¢/gal at Conway and Mont Belvieu butane at 82¢/gal. This was followed, in order, by propane at 54¢/gal at Conway and 59¢/gal at Mont Belvieu; and ethane at negative 4¢/gal at Conway and 2¢/gal at Mont Belvieu.

The shoulder season once again saw natural gas storage levels increase by normal levels after a strong winter and early spring resulted in high heating demand. According to the Energy Information Administration, storage levels rose 99 billion cubic feet to 1.964 trillion cubic feet (Tcf) from 1.865 Tcf. This was 26% below the 2.658 Tcf posted last year at the same time and 4% below the five-year average of 2.047 Tcf.

Storage injections should remain at a similar level this week as the National Weather Service’s forecast anticipates normal spring temperatures throughout much of the country. The coastal sections of the tri-state region and the Southwest are expected to experience warmer-than-normal temperatures.

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