A surge in crude imports from Canada and Saudi Arabia put a damper on draws from the U.S. petroleum inventory, Simmons & Co. International said in its weekly note.
Simmons expects current relatively high prices domestically to support continued lofty import levels. Demand is strong, the analysts said, but is being blunted by bloated inventories and limited drawdowns.
The price of West Texas Intermediate (WTI) crude closed on June 23 at $49.98/bbl. The benchmark Henry Hub price for natural gas was $2.69 per million Btu.
Growth in power-sector consumption has driven higher natural gas demand, beating levels of both a year ago and 2012, the U.S. Energy Information Administration reported on June 23.
“At 26 billion cubic feet per day (Bcf/d), power burn is at a record high for this time of year, 10% greater than year-ago levels and 5% above the level reported in 2012,” said the report.
The EIA also noted higher demand from exports, particularly to Mexico. Exports to that country have more than doubled since 2012 to 4 Bcf/d, and LNG exports have risen to 0.5 Bcf/d, from a negligible level in 2012.
The price of the hypothetical NGL barrel slipped 1.5% in the last week at the Mont Belvieu, Texas, hub and 2.5% at Conway, Kan. The Mont Belvieu price is still 11.5% above the price of the same week last year. Conway’s price is 17.4% ahead.
Ethane had a rough week at both hubs, falling 10.7% at Mont Belvieu after climbing for five straight weeks and 10.6% at Conway after six weeks of rising prices. The price at both hubs is 18.1% higher than it was a year ago.
Propane at Mont Belvieu returned to 50 cents per gallon (gal) for the first time in three weeks, rising 2% to 50.25 cents. At Conway, propane rose almost imperceptibly but is 30.7% above its price a year ago.
At Mont Belvieu, butane rose less than 1 cent/gal but is 31.6% ahead of last year’s price. Conway’s price of 61.19 cents/gal was a slight dip but still 41% above the price at this time last year.
Isobutane rose 1.8% at Mont Belveiu and only barely at Conway, though the prices were up 19 cents/gal or 39.7% at Mont Belvieu and 69.5% or almost 30 cents/gal at Conway.
C5+ dropped at both hubs, falling below $1/gal for the first time since mid-May at Mont Belvieu and down more than 3 cents/gal at Conway.
Natural gas storage increased by 62 Bcf in the week ending June 17 to 3.103 trillion cubic feet (Tcf). That is 24.9% of the 2.485 Tcf recorded a year ago and 28% over the 2.425 Tcf five-year average of 2011-2015.
Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.
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