Frac Spread: Prices Falling And They’re Not Done

Natural gas, ethane and propane struggle with too much output and more to come.

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Ethane tumbled to its lowest price since mid-August at Mont Belvieu, Texas, and the natural gas supply-demand imbalance prompted the U.S. Energy Information Administration (EIA) to forecast a 9% price drop for 2020 compared to 2019.

On the propane front, EnVantage Inc. described the outlook as “going to get uglier.”

The “EIA expects the natural gas spot price for the U.S. benchmark Henry Hub will average $2.33 per million British thermal units (MMBtu) in 2020, about 24 cents lower than the 2019 average of $2.57/MMBtu,” the EIA said in its “Today in Energy” report. “Following a year of decline, EIA expects 2021 natural gas prices to rise by 9% because of upward pricing pressure from declining growth in natural gas production.”

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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.