This was predicted by some analysts quite some time ago:
A slew of analysts, who long-ago predicted that the LLS price would slip
to well below the North Sea benchmark crude, are likely breathing a
sigh of relief as they utter “I told you so.”
LSS often sold at a premium to Brent and WTI but due to tsunami of shale oil from the Bakken, the Eagle Ford, and the Permian, LSS is slumping ... badly. The tsunami:
Last week, the Energy Information Administration said in a report that
Eagle Ford production is expected to rise just in the next month by
33,000 b/d to 1.28 million b/d. That production has grown substantially,
and is now surpassing growth in the Bakken. Meanwhile, oil output there
in the North Dakota sesson is expected to to increase by 26,000 b/d to 1
million b/d next month. At the same time, Permian Basin production is
expected to remain flat next month at about 1.34 million b/d. Most of
this production is expected to compete with or be blended into LLS.
They may actually ship the oil to the northeast United States by ship.
But it may have been harder to predict the rumored logistical
side-effects of relatively weak LLS prices. Market participants said
late last week that shippers are considering sending the relatively
cheap crude on vessels from St. James, Louisiana, to the Canadian and US
East coasts.
Remember three dots:
- Soros takes position in Delta
- Delta buys refinery in the northeast
- refinery buying less expensive Bakken oil
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