The hypothetical NGL barrel, riding a burst from the butanes, broke through $25 per barrel (bbl) at both hubs monitored by Hart Energy this week, reaching a level not seen in two years.
The Mont Belvieu, Texas, hub price reached $25.73/bbl, up 13.1% over the average cited during the week of Nov. 28. At the Conway, Kan., hub, the price rose 11.4% to $25.12/bbl.
Butane increased 16% at Mont Belvieu and 13% at Conway, while isobutane was up 20.4% at Mont Belvieu and 11.1% at Conway. Spreads were dramatic, too. Butane’s margin widened by 11.4% and isobutane’s by 19% at Mont Belvieu.
En*Vantage attributed the widening spreads to maintenance on the Enterprise Products Partners LP’s (NYSE: EPD) butane isomerization unit at Mont Belvieu. The work began in early October.
The analysts also noted that butanes and C5+ were riding the wave of soaring commodity prices in the wake of OPEC’s agreement to cut production. En*Vantage is less certain of the ultimate result.
“It is our opinion that the market is celebrating before seeing if the agreement can be implemented and enforced when it becomes official on Jan. 1,” they wrote in a weekly report.
Since declining below $2 on Nov. 11, natural gas prices have soared 90% at Chicago City Gate and 82% at the Houston Ship Channel. The price of butane has jumped 26%, and isobutane 31%, at Mont Belvieu since that time.
While spreads for the butanes and the NGL barrel in general have widened, ethane’s spreads continue to diminish. Ethane rejection of 704 Mbbl/d in September and historically high inventory levels indicate to En*Vantage analysts that petrochemical companies are holding on to volumes in anticipation of a surge in demand in late 2017.
The past week also marked the end of a month. The average NGL barrel price in November slipped 2% at Mont Belvieu and 4.6% at Conway compared to October. However, the Mont Belvieu barrel of November 2016 showed an 18% increase over the November 2015 price. At Conway, the improvement was 23.4%.
Propane and the butanes were particularly strong at both hubs. At Mont Belvieu, the November price of propane was 28% above the same month in 2015. At Conway, the difference was an increase of 33%.
November 2016 butane at Mont Belvieu was 23% ahead of the average for November 2015. At Conway, the increase was 26.5%. Isobutane at Mont Belvieu was 37.5% higher this year over last. At Conway, the November 2016 advantage was 31%.
Storage of natural gas in the Lower 48 declined by 42 billion cubic feet (Bcf) in the week ended Dec. 2, the U.S. Energy Information Administration reported. The decrease, less than the Bloomberg consensus prediction of 44 Bcf, resulted in a total of 3.953 Tcf. It is less than the year-ago withdrawal of 61 Bcf. The total is a 1.3% increase over the 3.902 Tcf figure at this time in 2015 and 6.9% above the five-year average of 3.699 Tcf.
Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.
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