Carbon Rich Value High – NGL Trading and Pricing Part III: Ethane
On Friday purity ethane in Mont Belvieu came in at 36.4 cnts/gal on OPIS, up 1.5 cnts while Conway ethane in E/P mix was up 1.25 cnts to 15.75 cnts/gal. Given that at this time last month Conway was trading at a dismal 2.25 ctns/gal while Mont Belvieu was wallowing under 30 cnts/gal, these numbers sound pretty good (See Chart #1 below). But let’s not lose sight of the fact that these prices are still dirt cheap. This time last year ethane prices were 2.5X to 3X higher. Is this simply a replay of the natural gas-oversupply-price-collapse story as some are saying? Or is it more complicated than that? As you’ve probably guessed, it is definitely more complicated than that. Because this the simplest of the NGL molecules turns out to be surprisingly complex in the marketplace. Today we’ll break down that complexity by looking at the details of the ethane markets.
