NGL Prices down ~16% in Q2 2019
Posted: Tue Jul 23, 2019 9:15 am
NGL markets take a beating in 2Q.
From Raymond James report on the Midstream Sub-Sector dated July 22, 2019:
"The five NGL "purity products" all have different supply/demand drivers, but pricing remains a partial derivative of international and domestic oil and gas markets. For context, Brent/WTI increased around ~8% on average in 2Q19, while Henry Hub natural gas declined ~12%. Comparatively, the NGL markets have had a tough go in 2019. After Mont Belvieu NGL prices averaged around ~$30/Bbl in 2018, composite barrel prices have moved down to $20/Bbl or less in recent months. Quarterly average prices for the composite barrel finished down ~16% Similarly, prices finished ~19% lower intra-quarter. On a percentage of WTI basis, NGL prices have averaged only ~35% of WTI oil prices in 2Q19, tracking below the historical average of +40%. In looking at the purity products, each finished 2Q significantly lower than it started the period – natural gasoline's ~11% intra-quarter decline was the best performance of the group, while normal butane's ~30% decline was the worst. The frac spread (short natural gas and long NGLs) finished 2Q significantly lower than it began it, down ~29%. The spread averaged more than ~20% lower Q/Q, despite crude prices outpacing natural gas. The inability of NGL prices to keep pace with WTI has certainly weighed on equity sentiment in the gas/NGL logistics and G&P spaces."
From Raymond James report on the Midstream Sub-Sector dated July 22, 2019:
"The five NGL "purity products" all have different supply/demand drivers, but pricing remains a partial derivative of international and domestic oil and gas markets. For context, Brent/WTI increased around ~8% on average in 2Q19, while Henry Hub natural gas declined ~12%. Comparatively, the NGL markets have had a tough go in 2019. After Mont Belvieu NGL prices averaged around ~$30/Bbl in 2018, composite barrel prices have moved down to $20/Bbl or less in recent months. Quarterly average prices for the composite barrel finished down ~16% Similarly, prices finished ~19% lower intra-quarter. On a percentage of WTI basis, NGL prices have averaged only ~35% of WTI oil prices in 2Q19, tracking below the historical average of +40%. In looking at the purity products, each finished 2Q significantly lower than it started the period – natural gasoline's ~11% intra-quarter decline was the best performance of the group, while normal butane's ~30% decline was the worst. The frac spread (short natural gas and long NGLs) finished 2Q significantly lower than it began it, down ~29%. The spread averaged more than ~20% lower Q/Q, despite crude prices outpacing natural gas. The inability of NGL prices to keep pace with WTI has certainly weighed on equity sentiment in the gas/NGL logistics and G&P spaces."