T?he frac-spread margins for February and into early March were highlighted by strong ethane-margin rebounds at both Conway and Mont Belvieu. Margins were bolstered by increased demand from olefins crackers favoring ethane over naphtha due to price differences.

Also, continued effects from the February 8 explosion at Enterprise Products Partners’ western storage facility at Mont Belvieu, which caused shortages, strongly impacted both ethane and propane margins. These shortages drove propane prices at Mont Belvieu to their highest levels in more than two years.

The effects began to subside in early March. Although ethane margins are likely to continue to grow, the same can’t be said for propane, because winter heating demand will soon diminish.

Pentanes-plus (C5+) margins showed the greatest strength of any natural gas liquid (NGL), based on the surge in crude oil prices. Because C5+ has the strongest relationship with crude, it has consistently posted the strongest pricing and margin improvements during this run-up.

Butane also benefited from the uptick in oil prices, but its price and margin may begin to slump as refiners switch from winter- to summer-grade gasoline.

Isobutane was an anomaly in the NGL markets over this four-week period, with an unexpected fall in both price and margin, unlike the other heavy NGLs. Although no market consensus exists on the cause of these downturns, they were likely due to the delayed switch by refiners to summer-grade gasoline.