Different Drum - NGL Markets Have Been Up, Down, and All Around. What Will Winter and 2022 Bring?

If there was ever a year that proves NGLs march to the beat of a different drummer, 2021 was it.  Compared to pre-pandemic volumes, production is up, not down. It’s the same story for exports. Price behavior has been even more extraordinary. We’ve seen startling counter-seasonal price swings in propane and butane markets. Ethane has been dancing to the tune of volatile natural gas prices. The wackiness has even extended to natural gasoline, which this summer enjoyed seven weeks as the preferred feedstock for U.S. flexible steam crackers. Heck, it’s not even winter yet. And 2022 is likely to be every bit as chaotic. In today’s RBN blog, we begin a blog series discussing recent developments in NGL markets and take a look at what lies ahead.

[This blog is based in part on several of the 44 presentations at our November 9-10 School of Energy, all of which were recorded and are now available for you to review. For more information about the 16-plus hours of course content, click here.]

Given that the markets for crude, gas, and NGLs are intensely interrelated — a central tenet of RBN’s energy-world view — it should come as no surprise that the massive dislocations caused by the COVID-19 pandemic over the past 21 months have had an impact on every nook and cranny of the hydrocarbon universe. We’ve chronicled the oil and natgas parts of all this (most recently in In the Mood? and How Long Can This Keep Going On for crude and Play It Again and the four-part Go West series for gas).   

We’ve also talked a lot this year about propane (see What's Price Got To Do With It and Do You Really Want To Hurt Me), which has been especially volatile and counterintuitive, with prices going to the moon in the off-season this summer and early fall — soaring 125% higher than in the summer of 2020 — then dropping like a rock by 30% over the past couple of weeks (Propane is trading at 103 c/gal this morning on ICE). A number of factors have played a role in the propane market’s roller-coaster journey this year and we’ll cover them all in this blog series.