NGL prices were largely stagnant, with a slight trend down at the end of June as they followed losses for natural gas price and crude. Overall, NGL prices largely remained flat compared to the levels posted in the second quarter.

Gas prices lost value due to weaker cooling demand from cooler-than-normal summer temperatures around the country. The Mont Belvieu price fell 6% to $4.38 per million Btu (/MMBtu) while the Conway price was down 1% to $4.42/MMBtu. Production may experience some stranding issues this month as several pipelines and processing plants will be down for maintenance, which could result in a short-term price improvement should cooling demand increase.

The market appears to have relaxed over the situation in Iraq as crude prices took a dip this week with the WTI price down to $103 per barrel (/bbl). Further, OPEC production rose in June and could experience another increase as Libya may soon restart its export terminals.

Ethane and propane, the NGL making up the light end of the theoretical bbl, experienced price decreases based on the decrease in gas values. Ethane prices in particular are strongly correlated to gas prices due to large storage builds caused by a significant volume of processing capacity being taken offline by plant maintenance. Although there have been the expected delays, it is anticipated that ethane cracking capacity will approach 1.2 MMbbl/d by August. It is likely that prices will take a bit longer to improve from their current levels, but they should see increases by the fourth quarter.

While ethane margins remain negative and prices continue to struggle, it is encouraging that they have performed as well as they have considering the headwinds they have faced for much of the past two years. The Mont Belvieu price fell 2% to 28 cents per gallon (/gal), its lowest price of 2014. The Conway price dropped 4% to 25 cents/gal, the lowest it has been since it had the same value the week of April 9.

The price differential for propane was once again minimal as the Mont Belvieu price was flat at $1.07/gal and the Conway price dropped 1% to $1.08/gal. There is a growing sense that propane inventories will be able to meet heating and crop-drying demand.

The Energy Information Administration (EIA) reported that propane inventories rose to 1.8 MMbbl in April, the most recent data available. This was up from 1.4 MMbbl the previous month and 1.1 MMbbl in February. “Strong inventory builds over the next few weeks, due to dramatically lower exports, should reduce or eliminate the year-on-year stock deficits caused by this winter’s record conditions,” PIRA Energy Group said in a research note dated June 29.

Heavy NGL prices followed the mild downturn in crude the final week of June as only Conway isobutane had a price improvement. Midcontinent prices fell greatly in the past month with average price in June down 29 cents/gal from the May average. However, there was a modest 1% increase in value this past week as alkylate demand from refineries is increasing along with gasoline demand. This helped elevate the Conway price to $1.44/gal, the third-lowest price at the hub since the week of March 19. The Mont Belvieu price fell 1% to $1.36/gal, the second-highest price at the hub since the week of February 19.

The theoretical NGL bbl price fell 1% at both hubs with the Conway price down to $42.39/bbl with a 1% drop in margin to $26.24/bbl. The Mont Belvieu price decreased to $42.69/bbl with a 2% gain in margin to $26.69/bbl. The Gulf Coast margin gain was largely due to the larger decrease in gas prices.

The most profitable NGL to make at both hubs was C5+ at $1.74/gal at Conway and $1.76/gal at Mont Belvieu. This was followed, in order, by isobutane at $1.00/gal at Conway and 92 cents/gal at Mont Belvieu; butane at 80 cents/gal at Conway and 83 cents/gal at Mont Belvieu; propane at 67 cents/gal at Conway and Mont Belvieu; and ethane at negative 5 cents/gal at Conway and negative 1 cent/gal at Mont Belvieu.

Natural gas storage had another solid week of injections at an even 100 billion cubic feet the week of June 27, according to the EIA’s most recent data. This increased the storage level to 1.929 trillion cubic feet (Tcf) from 1.829 Tcf the previous week. This was 26% below the 2.595 Tcf figure posted last year at the same time and 29% below the five-year average of 2.719 Tcf.

Storage levels could experience another solid gain the first week of July as the forecast in the Midwest and parts of the Gulf Coast anticipates cooler-than-normal temperatures. This will be somewhat tempered by warmer-than-normal temperatures along the Northeast seaboard, the West Coast, Pacific Northwest and parts of the Southwest. The rest of the country can anticipate normal summer temperatures.

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