Ethane broke through 25 cents per gallon (gal) in the past week at Mont Belvieu, Texas, for the first time in two months and only the seventh time all year as rising exports countered high inventories.
All NGL rose in price and enjoyed wider margins at both the Mont Belvieu and Conway, Kan., hubs as average natural gas prices over the five-day period also rose.
En*Vantage is taking a bullish position on crude oil prices, expecting a price of $50 per barrel (bbl) by the end of July (West Texas Intermediate was trading at just above $47/bbl at midweek). U.S. crude oil inventories have been declining, the rig count is up but not by much, and the analysts are wondering if the U.S. Energy Information Administration’s (EIA) oil production figures are overstated.
“For the record, as of the week ended July 19, crude oil inventories have dropped 44.9 MMbbl since they peaked at 535.5 MMbbl for the ended March 31,” En*Vantage said. “That is an 8.4% decline and at no time over the last 20 years have we seen a percentage drop in oil inventories this large. Last year, over the same period, the drop in U.S. oil stocks was only 9.8 MMbbl or 2% and the five-year average is a 6.1 MMbbl decline for a 1.5% drop.”
En*Vantage expects another 15 MMbbl drop in U.S. crude oil stocks by the end of August.
Ethane, rising for the fourth straight week and the sixth time in the last seven weeks at Mont Belvieu, is 39.5% higher than it was at this time last year. At Conway, the price of ethane is up for the third time in the last four weeks and is a rousing 59.6% higher than at this point in 2016. En*Vantage notes that all ethylene plants are operating at the moment, with estimated ethane cracking at more than 1.3 MMbbl/d.
Propane balances continue to improve, En*Vantage said, with expectations of a price hike sometime before the end of 2017. Conway’s propane price of 63.18 cents/gal was its highest in 14 weeks and 52.4% higher than the price at this time last year. Mont Belvieu’s price was also the highest since mid-April and 41.2% above last year’s price.
A combination of the completion of Sunoco Logistics’ (now part of Energy Transfer Partners LP) Mariner East 2 pipeline project that supplies the Marcus Hook terminal, and a pre-winter push by European and Asian customers—along with other market factors—could propel the propane market, En*Vantage believes.
Butane also hit highs at both hubs not seen since mid-April. Butane is up 35.4% at Mont Belvieu compared to this time in 2016. At Conway, the 12-month gain was 34.8%.
Isobutane, up 17.9% over the last four weeks at Mont Belvieu, cracked 80 cents/gal for the first time since mid-April. Year-over-year, the price of Mont Belvieu isobutane has risen 23.2%. At Conway, isobutane eclipsed 85 cents/gal for the first time since mid-April and was 31.8% above the year-ago price.
Storage of natural gas in the Lower 48 increased by 17 billion cubic feet (Bcf) in the week ended July 21, the EIA reported. The increase, below the Bloomberg consensus of 24 Bcf, resulted in a total of 2.99 Tcf. The figure is 9.2% below the 3.292 Tcf figure at the same time in 2016 and 3.9% above the five-year average of 2.879 Tcf.
Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.
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