While crude oil prices have lost more than $8 per barrel in the week following the earthquake and tsunami in Japan, natural gas liquids (NGL) prices have remained relatively firm.
For the week of March 9, the largest loss in value was for C5+, which fell 4% at both Mont Belvieu and Conway. This was anticipated, considering its close relationship with crude. Crude oil prices fell due to an expected decrease in demand from Japan.
“Barring a major economic slowdown, the U.S. petrochemical industry may become a key player in providing incremental petrochemicals to bridge the supply/demand gap created by the Japanese crisis. Additionally, the U.S. could become a major supplier of LPGs to Japan,” according to En*Vantage’s Weekly Energy Report.
The price at Mont Belvieu was down to $2.41, while the Conway price fell to $2.43. Both prices were the lowest at their respective hubs in a month. This was also the fourth straight week that the Kansas price was greater than its Texas counterpart, which is rare.
Meanwhile, isobutane posted strong gains at Mont Belvieu after experiencing a sharp drop in value last week. The NGL is used to make alkylate, a key component in summer-grade gasoline. As refiners switch over to this blend, isobutane will continue to post gains. For the week of March 9, Mont Belvieu isobutane gained 5% in value to $1.91. The Conway price moved in the opposite direction as it lost 3% in value to fall to $1.83, the lowest price at the hub since it was $1.82 the week of February 2.
Butane prices continued to drop as refiners switched from winter-grade gasoline blends. However, these price drops weren’t as sharp as in the past few weeks and it appears that butane prices are stabilizing. The Conway price was down 2% to $1.63, the lowest price at the hub since it was $1.59 the week of February 9. The Mont Belvieu price of $1.76 was largely unchanged from last week.
Heating demand dropped again this week as winter weather gave way to spring temperatures across much of the country. Propane prices reflected these changes with Mont Belvieu down 3% to $1.34, its lowest price since it reached the same value the week of February 9. The Conway price fell 2% to $1.26, its lowest price in a month.
The biggest surprise this week for NGL prices was that ethane remained strong. The Mont Belvieu price dropped only 1% to 65¢, its lowest price in five weeks. The Conway price fell a bit more, as it was down 2% to 47¢, which was its second highest price since the beginning of the year. – Frank Nieto
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