The post-July 4 holiday was a sleeper for NGL prices, which mostly moved up slightly along with margins. It might be the calm before the storm, however.
Literally. Colorado State University revised its forecast for the 2017 Atlantic hurricane season and expects above-average activity. Researchers pointed to lessening chances of a significant El Niño event this year, along with unusually warm water in the tropical and subtropical Atlantic.
The university’s Tropical Meteorology Project estimates for 2017 are:
- Eight hurricanes (median is 6.5);
- 12 named storms (median is 12);
- 66 named storm days (median is 60.1);
- 35 hurricane days (median is 21.3);
- Three major (category 3-4-5) hurricanes (median is 2.0); and
- Seven major hurricane days (median is 3.9).
Chances of a major hurricane making landfall in the U.S. are up 20% over the long-term (1981-2010) average, the university’s researchers said. And if you’re skeptical about what land-lubber researchers know about hurricanes, the National Oceanic and Atmospheric Administration of the U.S. Department of Commerce echoes that forecast.
What it means, En*Vantage said, is a healthy power demand for the Lower 48 this summer, one that is in line with the firm’s natural gas storage models for the near term.
In the past week, propane prices rose just slightly at the Mont Belvieu, Texas, and Conway, Kan., hubs. However, propane was 23.5% higher than its price at this time in 2016 at Mont Belvieu and 25.2% higher at Conway.
Export margins to Europe and Asia have been tight and En*Vantage expects cargo cancellations and deferrals to continue through the month. U.S. inventories have been rising, too, but despite these factors, propane was priced at 57% of the price of West Texas Intermediate (WTI) crude oil, compared to just 43% at this time last year, En*Vantage said. The analysts explain this as a reflection of the improvement in U.S. propane balances this year.
Propane prices at both hubs were their highest in five weeks, with Mont Belvieu cracking 60 cents per gallon (gal).
Butane rose above 70 cents/gal at both hubs for the first time since late May/early June. Increasing demand for gasoline is behind the stronger prices, En*Vantage said. The Mont Belvieu price was 18.8% higher than the price of the same week a year ago. At Conway, the gain was 17.3%. Isobutane was up 12.4% over 2016 at Mont Belvieu, and up 22.9% at Conway.
Storage of natural gas in the Lower 48 increased by 57 billion cubic feet (Bcf) in the week ended July 7, the U.S. Energy Information Administration reported. The increase, below the Bloomberg consensus of 58 Bcf, resulted in a total of 2.945 Tcf. The figure is 8.9% below the 3.234 Tcf figure at the same time in 2016 and 6.2% above the five-year average of 2.773 Tcf.
Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.
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