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NGL prices last week rose to their highest levels since late May, with the hypothetical barrel breaking through $23 at Conway, Kan., and $24 at Mont Belvieu, Texas.
With the exception of Conway isobutane, margins increased for all NGL.
Market fundamentals are strong enough to keep the price of West Texas Intermediate (WTI) crude oil above $40 per barrel (bbl) and possibly crack $50/bbl this summer, En*Vantage Inc. said in a report, citing recent statistics released by the U.S. Energy Information Administration (EIA).
Ethane popped back up to 24.61 cents per gallon (gal) at Mont Belvieu and broke through 20 cents/gal at Conway. Ethane inventories are high, En*Vantage notes, but markets are bullish in anticipation of increasing demand as crackers come online. The Mont Belvieu price was 32.7% higher than the price last year at this time. At Conway, the gain was 41.9%.
Commissioning of Dow Chemical’s Freeport cracker in August will likely result in a step change in demand for ethane in September. Over the short term, ethane inventories will decline to a 28-day supply by October, En*Vantage expects, putting ethane prices over 25 cents/gal by September and 30 cents/gal by the end of 2017.
Propane, which bounced up 6% to a seven-week high of 64.24 cents/gal at Mont Belvieu and 7.3% to 61.03 cents/gal at Conway, is primed for a second-half price spike, En*Vantage believes. That’s because bearishness toward crude oil may result in a reluctance to stockpile propane.
However, propane stocks in the U.S. are relatively tight. A chilly fall and winter could tighten those inventories even more and propel prices skyward. By the end of October, En*Vantage forecasts, U.S. propane inventories could be reduced to a 35-day supply.
Compared to last year at this time, the price of propane is 32.9% higher at Mont Belvieu and 40.7% higher at Conway.
Butane hit three-month highs at both hubs, reaching 74.23 cents/gal at Mont Belvieu and 73.37 cents/gal at Conway. Mont Belvieu’s price was 24.3% above the price at the same time in 2016. At Conway, the difference was 22.9%.
Storage of natural gas in the Lower 48 increased by 28 billion cubic feet (Bcf) in the week ended July 14, the EIA reported. The increase, below the Bloomberg consensus of 34 Bcf, resulted in a total of 2.973 Tcf. The figure is 9.1% below the 3.272 Tcf figure at the same time in 2016 and 5% above the five-year average of 2.832 Tcf.
Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.
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