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Ethane, natural gasoline see early-week battering on storage issues, liquidation
HOUSTON, February 2, 2017 (PCW) -- Spot ethane and natural gasoline prices saw tremendous volatility this week, kicking off Monday by losing 20-21% of its value. Trading ranges swung wildly with an 8.25 cpg range seen in ethane and a 30 cpg for natural gasoline.
On Monday, natural gasoline was even assessed lower than LST propane – a first since PetroChem Wire began assessing NGL prices in 2007. Ultimately, both purity products saw some correction by week’s end that led ethane to finish only down 0.5 cpg, while natural gasoline was 10.25 cpg softer (see graph below).
While neither crude nor natural gas’ influence came into play in these price movements, there are some compelling fundamental reasons that have pressured these purity products. From ethane’s standpoint, there is lower demand from petrochemical firms.
With two olefins plants (CP Chem Sweeny 33 and Formosa Olefins II) down for planned turnarounds and two more (Williams’ Geismar and ExxonMobil’s BOP-X at Baytown) running at significantly reduced rates, about 161,000 b/d of ethane demand is lost. Enterprise Product Partners’ Morgan’s Point export terminal has conducted two rounds of maintenance since Jan 10. Although Reliance’s VLEC, the Ethane Emerald, departed the terminal on Jan 18, no further loadings have been seen since then.
The JS Ineos Ingenuity, which had been moored at the terminal since early Jan, recently departed for the Marcus Hook facility without loading an export cargo.
But the suddenness of the drop on Monday (4 cpg for ethane and 21.125 cpg for natural gasoline) and similar rapidity of price correction on Thursday (3.625 cpg for ethane, 8 cpg for natural gasoline) indicate other strategies at work.
Containment issues at Mont Belvieu storage caverns have been widely reported by several market sources, which are particularly affecting ethane and natural gasoline storage. Additionally, natural gasoline storage appears to be extremely tight amid record high inventory levels, preventing players from rolling into the next month and forcing supplies into the spot market. Sources also noted that, beginning on Monday, a major NGL player has exited from physical storage at Mont Belvieu putting a glut of their supplies on the spot market.
This corresponds with the record volumes that transacted, specifically for ethane, on the exchanges during the same time frame. -- Samantha Hartke