The price of ethane returned to its mid-November level with a 15% bounce at Mount Belvieu, Texas, last week. At Conway, Kan., the 16.7% increase delivered ethane’s highest price since mid-August.

The leap contrasted with sagging prices for other NGL except for butane, which suffered a sharp decline.  Butane fell 9.5% at Mont Belvieu and 8.4% at Conway to its lowest point in four months at both hubs.

Ethane’s margin at Mont Belvieu, by Hart Energy’s calculations, more than doubled in the past week to an average above 5 cents per gallon (gal) for the first time since early December.

The spike in natural gas prices brought on by the recent frigid weather across much of the country lifted ethane prices, too. En*Vantage cited well freeze-offs and extreme cold-induced operational problems at some processing plants that took some ethane off the market.

“Ethane had become so oversold in December that buyers are now stepping back into the ethane market knowing that a surge of ethane demand will be occurring in the second quarter as new cracking capacity comes online,” En*Vantage said. The analysts estimated that an additional 200,000 to 300,000 barrels per day (bbl/d) were being rejected. 

West Texas Intermediate crude oil pushed past $63/bbl on Jan. 10, nearing levels not seen since OPEC’s Thanksgiving 2014 meeting. Market fundamentals such as significantly lower crude oil inventories support the higher price even without the extreme weather event and protests in Iran. Typically, that sort of movement would bolster butane prices, too, En*Vantage noted, but such is not the case this time around for no apparent reason. 

“Butane blending demand should remain strong through the end of February and export margins are widening,” En*Vantage said. “With propane prices only 6 cents/gal below normal butane prices at Mont Belvieu, normal butane should be attractive as a fuel in Latin America or in Southeast Asia.”

High demand cut into storage of natural gas in the Lower 48, which experienced a decrease of 359 billion cubic feet (Bcf) in the week ended Jan. 5, the U.S. Energy Information Administration reported, more than the Bloomberg consensus of a 329 Bcf draw and the 2017 draw of 136 Bcf. The figure also contrasts with the five-year average decrease of 169 Bcf, resulting in a total of 2.767 trillion cubic feet (Tcf). That is 13% below the 3.182 Tcf figure at the same time in 2017 and 12.1% below the five-year average of 3.149 Tcf.

Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.