Frac Spread: Natural Gas Spike Cuts Into Margins

NGL prices static as commodity traders remain unimpressed with progress on China trade deal.

Denver cold

Snow covers a car during an October storm in Denver. (Source: Shutterstock)

The benchmark Henry Hub natural gas price rose sharply as temperatures fell sharply across the U.S. last week, with even colder weather expected through Nov. 1. NGL prices held steady so the costlier gas battered NGL margins. Mont Belvieu, Texas, ethane barely clung to 1 cent per gallon (gal) in the positive.

News of an imminent resolution to the U.S.-China trade war delighted equity markets, with the Dow Jones industrial average springing back over 27,000. Commodity markets, however, were not as impressed and West Texas Intermediate (WTI) crude oil retreated on Oct. 30 after the U.S. Energy Information Administration reported an increase of 5.7 million barrels to inventories.

Despite the recent spike, natural gas prices in the U.S. are on track to set a 25-year low in 2019 and the trend does not appear ready to end soon.

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Joseph Markman

Joseph Markman, senior editor for Hart Energy, covers markets and provides data analysis for all Hart Energy editorial products.