Last week’s five-day average price of the Mont Belvieu, Texas, hypothetical NGL barrel dipped below $18 for the second time in eight weeks and only the third time in 40 months. Crude oil also buckled under the dual-stresses of higher-than-expected inventories and a weakening global economy.
The NGL barrel has been below $20 for eight of the last nine weeks and its most recent price of $17.98 was 1 cent below the $17.99 price for the week ending April 5, 2016. Third-quarter prices have mirrored those of March-April 2016, a time when the oil and gas industry struggled with low commodity prices.
Ominously, last week’s price of Mont Belvieu ethane, despite a 34% two-week rally, was below the lowest point in the 2014-2017 downcycle. Ethane and ethylene inventories remain high, and new crackers coming online won’t necessarily resolve the problem of a global economic downturn.