The propane- and butanes-fueled rally pushed NGL prices to 37-month highs at both hubs during the eight-day “week” that was extended by the Thanksgiving Day holiday.

Propane found its way to a 38-month high at the Mont Belvieu, Texas, hub as it nearly averaged $1 per gallon (gal) for the first time since October 2014. The price at the Conway, Kan., hub missed 96 cents/gal by one one-hundredths of a cent, also a 38-month high.

Margins improved for all NGL at the two hubs except for Mont Belvieu C5+, which dipped slightly.

Much of the optimism surrounding natural gas prices has been the vast potential of the Mexican market. U.S. companies, capitalizing on Mexico’s energy reform and sunny projections of steadily ramping demand, have been building pipelines and shipping higher volumes of gas south.

The problem, as En*Vantage Inc. notes, is that while Mexico’s domestic gas production has declined 1.4 billion cubic feet per day (Bcf/d) from 2015 to 2017, U.S. exports to that country have increased by 1.3 Bcf/d. In other words, U.S. export growth has matched the loss in Mexican production, revealing none of the anticipated increase in consumption demand.

“If drilling ever picks up in places such as the Burgos Basin in northern Mexico (which is the intent of the Mexican government) we may find that the theoretical growth that we have been expecting could even be much lower than expected,” En*Vantage analysts said.

Ethane prices stumbled again at Mont Belvieu, dropping to their lowest point since mid-September, although the price at Conway rose above 18 cents/gal for the first time in five weeks. The recent price woes do not worry En*Vantage, however.

“The rut that ethane prices are in is temporary in our opinion,” the analysts wrote. “The next big wave in demand for ethane is still several months away.”

Ethane remains economical for U.S. crackers, they note, and ethane inventories in this country will likely drop after October through first-half 2018. The current Brent-to-West Texas Intermediate crude oil differential also gives ethane an edge over naphtha for customers in Europe and Asia.

Several factors continue to support elevated propane prices, among them strong export volumes and rising crude oil prices. U.S. inventories are also more than 27 million barrels below stocks at this time last year, En*Vantage said. That means 34 days of supply, compared to 62 days at this time in 2016.

Storage of natural gas in the Lower 48 decreased by 33 Bcf in the week ended Nov. 24, the U.S. Energy Information Administration reported, below the Bloomberg consensus of a 36 Bcf draw and well below the 2016 draw of 43 Bcf. The figure is also below the five-year average decrease of 47 Bcf, resulting in a total of 3.693 trillion cubic feet (Tcf). That is 7.7% below the 4.002 Tcf figure at the same time in 2016 and 2.8% below the five-year average of 3.8 Tcf.

Joseph Markman can be reached at and @JHMarkman.