OPEC’s decision to continue all-out production placed further downward pressure on commodity prices as West Texas Intermediate (WTI) crude prices fell to $36.75 per barrel (/bbl) on Dec. 10. This is close to the low for the year and it is expected that this will help curtail production enough that the market could begin to rebalance by the fourth quarter of 2016, according to Barclays Capital.

The OPEC announcement resulted in the investment firm lowering their WTI and Brent price forecast for 2016 to $60/bbl for Brent and $56/bbl for WTI. “Our market balances have loosened over the past two months, and prices are ending the fourth quarter of 2015 slightly lower than our September forecast. Though starting from a lower base price level in December, we continue to expect fundamental supply drivers to tighten the market balance, bringing global supply and demand in line by the fourth quarter of 2016 and bringing Brent back to $65/bbl in the second-half of 2016,” the investment firm said in a recent research report.

That price is well off the breakeven price of $100/bbl that PIRA Energy Group predicted. The group was quick to caution that breakevens are not a strong predictor of oil prices or a price floor that OPEC will support.

“Countries are more likely to adjust to the reality of low oil prices by cutting spending or drawing on reserves, just as we’ve seen over the past year,” PIRA said in a research note.

Despite domestic production decreasing with the price downturn, crude inventories are swelling as crude imports have consistently increased in the past month. The one benefit to the current price situation is that low gasoline prices are encouraging more consumer demand, which will help to work off some of the crude supplies.

While market dynamics may work themselves out in the next year, the first-half of 2016 is likely to continue to be a rough going for crude, gas and liquids prices.

The further downturn in crude saw both gas and NGL prices take a hit as natural gas fell 7% to $1.91 per million Btu (/MMBtu) at Conway and 8% to $2.01/MMBtu at Mont Belvieu. NGL prices didn’t experience quite the same drop, but the theoretical bbl price at both hubs was among the lowest for the year as the Conway bbl fell 4% to $17.85/bbl with a 2% decrease in margin to $10.87/bbl. The Mont Belvieu price dropped 3% to $18.97/bbl with a very modest gain in margin to $11.63/bbl.

NGL prices tumbled, but are performing slightly better than WTI crude due to LPG exports and decreased ethane inventory levels caused by widespread rejection. The negative for ethane is that it is competing with propane and butane as an ethylene feedstock, which is putting a cap on its growth.

Ethane prices at both hubs were among their lowest levels for the year as the Mont Belvieu price fell 6% to 16 cents per gallon (/gal), its lowest level since April; and the Conway price fell 4% to 14 cents/gal, its lowest price in a month.

Propane prices had a similar path as the Conway value was down 4% to 36 cents/gal, its lowest price since late August; and the price at Mont Belvieu fell 1% to 42 cents/gal, which is a similar level it has traded for the past month.

Though prices are dropping, so are inventories for both products. The U.S. Energy Information Administration (EIA) reported that propane stocks in the first week of December hit their lowest withdrawal levels in 13 years for this period. However, they are still at record levels, so there is much work left to do to restore balance.

The most profitable NGL to make at both hubs was C5+ at 72 cents/gal at Conway and 73 cents/gal at Mont Belvieu. This was followed, in order, by isobutane at 46 cents/gal at Conway and 44 cents/gal at Mont Belvieu; butane at 40 cents/gal at Conway and 42 cents/gal at Mont Belvieu; propane at 19 cents/gal at Conway and 24 cents/gal at Mont Belvieu; and ethane at 2 cents/gal at Conway and 3 cents/gal at Mont Belvieu.

According to the EIA, natural gas storage levels fell by 76 billion cubic feet to 3.88 trillion cubic feet (Tcf) the week of Dec. 4 from 3.956 Tcf the previous week. This was 15% greater than the 3.366 Tcf level posted last year at the same time and 7% greater than the five-year average of 3.644 Tcf.

Though storage withdrawals have improved the last few weeks, there is still limited heating demand compared to average years and this is expected to continue into the new year, according to AcccuWeather.

The weather agency is forecasting that more persistent winter weather for the Midwest and Northeast is still many weeks away. "We expect some colder air masses and perhaps opportunities for snow to pick up toward the middle of January," AccuWeather chief long range meteorologist Paul Pastelok said in a recent forecast. "February should be busy in terms of cold air, storms and the potential for snow."