Monday, September 17, 2012

Bakken Selling At Premium to WTI at East/West Coast Refineries Due to Rail

I missed this story; a reader sent me the link at Bloomberg. The record production is of secondary importance; everyone now knows that. The important nugget in this story:
Bakken oil on the spot market rose $1.25 to $103.81 a barrel at 11:03 a.m. New York time, according to data compiled by Bloomberg. Its premium to West Texas Intermediate, the benchmark U.S. crude, surged to $6.50 a barrel on Sept. 10, the highest level in almost a year, as refineries on the East and West coasts gained more access to it through rail shipments.
This is the second time that I am aware of that Bakken has sold at a premium to WTI.

On a related note: I get a kick out of this story. Someone recently wrote that crude-by-rail was the last resort; the reader stated that pipeline was the preferred way to ship. We are seeing the benefits of flexibility that rail offers.

A huge "thank you" to the reader for alerting me to this article.


  1. A premium? I'll believe it when I see it on a check stub :) However, Bakken oil is a premium light sweet crude and, all things being equal (which they're not), should carry a premium.

    The transportation differential has been a beast even before the Bakken production began to soar. So the availability, and flexability, of rail capacity is most welcome, but so would additional pipeline capacity.

    1. The premium is being paid at select terminals. And that's the spot price. Most oil, I assume, is sold on contract, either 6-month, or yearly, with hedges.

  2. Bruce,

    I was keeping track of Bakken crude spot price at Clearbrook through Bloomberg. They no longer provide that price at the link I was using.
    Do you happen to have another?

    Tom Scott

    1. Unfortunately, I haven't an alternative site. And apparently we aren't the only ones looking.

      Bloomberg still provides the chart: