Natural gasoline at Mont Belvieu, Texas, last week posted its highest price since June 2015—a 28-month stretch—as the hub’s composite NGL barrel (bbl) extended its stay above $30 to five weeks.
While last week’s price of $31.76/bbl was only the third-highest for the year, the five-week rally represented the longest maintenance of the $30-plus price level since late November 2014, when the lowering tide of the down-cycle was sinking all NGL boats. At Conway, Kan., the barrel remained above $30 for two consecutive weeks for the first time since February.
In its quarterly report, Jefferies credited the after-effects of Hurricane Harvey for third-quarter NGL price spikes and contemplated the potential of a price surge for propane if forecasts for a chillier winter come through in the Northeast and mid-Atlantic states.
Propane had little price movement at either hub in the last week but still registered among the highest weekly averages of the year, and was 61% above the year-ago price at Mont Belvieu and 62.5% higher at Conway.
Ethane remains the most oversupplied NGL, Jefferies said, with a 34.6-day July inventory that was 31% above the five-year average. The analysts noted that butane and C5+ were also oversupplied, but below historical norms.
Ethane’s price has been stagnant since Harvey damaged numerous ethylene plants. Despite last week’s increase, the price at Conway was still 21.7% below the pre-Harvey August peak. Ethane returned to its pre-Harvey price in September but has slipped for three straight weeks.
Domestic demand for butane, Jefferies said, is slightly behind year-to-date demand in 2016. The price, of course, is way ahead (38.4% last week at Mont Belvieu and 41.8% at Conway). That is because exports have ramped up—an all-time average high of 180,000 bbl/d was set in March and substantial monthly year-over-year increases were recorded in June and July.
“...[W]e forecast butane prices in 2018 to average 90 cents/gal as exports continue to provide incremental demand and crude oil prices modestly recover,” Jefferies said.