For The Archives: Article Helps Explain The Sudden Drop In Oil Price; Will Correct; Before The Flood -- Preview Of A US Market Drowning In Oil -- Reuters

Reuters is reporting:

The U.S. oil market is getting its first real taste of a remarkable phenomenon that may soon become a permanent reality: an excess of light sweet crude oil.

With a swath of refineries shut down for routine seasonal maintenance this month, the unyielding gusher of crude from U.S. shale wells and Canadian oil sands plants has temporarily overtaken demand from refiners, say analysts and traders. 

This is a very, very long article. I doubt most folks will read it to the end; I did not. I will come back to it. But it's filled with interesting data points.

RBN Energy's Rusty  Braziel is quoted:

Oil priced at St. James is now so cheap that BP is sending it to Canada, shipping data show. While cargo shipments from Texas to Irving's refinery in St. John's, Newfoundland, have become relatively common this year, oil shipments from the Port of Louisiana are rare.

Even the premium for Alaska North Slope on the West Coast, a market that typically bears little relation to the domestic U.S. market, has been affected. The crude has hit discounts of more than $7 a barrel to Brent for the first time since late 2012. 

"If continued, this trend would suggest that ANS prices are being driven more by U.S. domestic crude rather than by competition from imports. That would be a startling development," since only a limited amount of shale crude is moving West, RBN Energy analyst Rusty Braziel wrote this week.

By the way, this quote from the President today ...

“What we’re also discovering is that insurance is complicated to buy.” President Obama, November 14, 2013. Link.  ...

... explains a lot. It explains to me why he has not made a decision on the Keystone XL. If he thinks buying insurance is complicated, imagine what it's like for him to try to figure out why "we" need pipelines. I wonder if he thinks buying car insurance is complicated. I know a 15-minute phone call to Geico can save you $500 or something like that.

Disclaimer: this is not an endorsement for Geico. Do not make any 15-minute phone call to Geico, Progressive, or Nationwide based on what you read here or what you think you may have read here.