NGL Market is improving
Posted: Wed Jul 26, 2017 8:39 pm
Tom Abrams – Morgan Stanley
July 26, 2017 4:01 AM GMT
C3+ components have seen relative strength despite declines in WTI. Propane continues to tighten, which could be further driven by new export demand (ME2) and strong crop drying in 2H17.
2Q17 Review: relative strength despite WTI weakness. C3+ components trended lower with WTI, but not as quickly, allowing pricing relationships to experience relative strength. Propane increasingly is in a tight market despite lower export levels in 2Q as inventories attempt to build to more normalized, seasonal levels. We will be monitoring the coming weeks for any updates on LPG cancellations potentially scheduled for the balance of the year. For ethane, which has been stronger of late, we are watching new petrochemical facilities along the Gulf Coast as any delay in start-ups could cause ethane to retreat to lower values on a fuel equivalent basis. So far startups are as planned.
Ethane continues to show strength on higher gas and rising demand. Despite concerns earlier in the year around elevated inventory levels, ethane has traded well on the back of stronger gas prices.
Gas prices have been supported by tight underlying market conditions. As ethane exports continue to ramp at EPD's Morgan Point facility along with the start-up of new crackers along the Gulf Coast we anticipate relatively firm ethane pricing through the balance of the year.
Propane was strong for the quarter on strengthening supply/demand balances. Exports stepped down in 2Q on stronger pricing (relative to WTI), but were in-line with 4Q16 export levels. We have generally seen a tight domestic market for propane as days supply continues to trend lower. With an anticipated start-up of Mariner East 2 in 4Q17, propane markets could become increasingly tight, especially if a strong crop drying season occurs, resulting in potential headwinds for export margins. Normal and Iso Butane / Pentanes Plus catching a bid with little known pricing remains elevated despite inventory levels that remain in-line.
July 26, 2017 4:01 AM GMT
C3+ components have seen relative strength despite declines in WTI. Propane continues to tighten, which could be further driven by new export demand (ME2) and strong crop drying in 2H17.
2Q17 Review: relative strength despite WTI weakness. C3+ components trended lower with WTI, but not as quickly, allowing pricing relationships to experience relative strength. Propane increasingly is in a tight market despite lower export levels in 2Q as inventories attempt to build to more normalized, seasonal levels. We will be monitoring the coming weeks for any updates on LPG cancellations potentially scheduled for the balance of the year. For ethane, which has been stronger of late, we are watching new petrochemical facilities along the Gulf Coast as any delay in start-ups could cause ethane to retreat to lower values on a fuel equivalent basis. So far startups are as planned.
Ethane continues to show strength on higher gas and rising demand. Despite concerns earlier in the year around elevated inventory levels, ethane has traded well on the back of stronger gas prices.
Gas prices have been supported by tight underlying market conditions. As ethane exports continue to ramp at EPD's Morgan Point facility along with the start-up of new crackers along the Gulf Coast we anticipate relatively firm ethane pricing through the balance of the year.
Propane was strong for the quarter on strengthening supply/demand balances. Exports stepped down in 2Q on stronger pricing (relative to WTI), but were in-line with 4Q16 export levels. We have generally seen a tight domestic market for propane as days supply continues to trend lower. With an anticipated start-up of Mariner East 2 in 4Q17, propane markets could become increasingly tight, especially if a strong crop drying season occurs, resulting in potential headwinds for export margins. Normal and Iso Butane / Pentanes Plus catching a bid with little known pricing remains elevated despite inventory levels that remain in-line.