Bakken Crude Differentials Soar On Widening Brent-WTI Spread -- Platts -- May 30, 2018 -- Williston Bbls Rise To Parity With Clearbrook For First Time

Updates

Later, 2:52 p.m. CDT: regular readers of the blog know that I have said many, many times, operators in the Permian may be struggling, vs the Bakken operators who should be doing very, very well. Some thoughts, right, wrong, indifferent. If you are not seeing the same thing, we are probably watching different movies --

• costs going up significantly
• 460 rigs in the Permian vs 60 rigs in the Bakken; overall production in each basin not all that far apart
• Permian pipelines maxed out; no short term solutions
• high CAPEX costs as operators try to recover entry costs
• interest rates going up
• in addition to pipeline, other infrastructure in place in the Bakken
• the Bakken: in the "manufacturing stage"
• the Permian: boom phase and all the problems associated with the boom 

Original Post

 
This is a "keeper." The entire article has been archived. A must-read for anyone interested in the Bakken.

Platt's link here.

Bakken crude differentials soar on widening Brent-WTI spread Houston (Platts)--30 May 2018 615 pm EDT/2215 GMT.

Bakken crude differentials for delivery in July rose sharply Wednesday to multi-month highs, flipping to a premium to the NYMEX WTI calendar-month average amid further widening Brent-WTI crude spreads, with Williston barrels rising to parity with Clearbrook for the first time.

Bakken had a very active spot market, with differentials heard going up continually throughout the day. [A reminder: CLR is not hedged.]

"This is pretty wild," a market source said.

Sources cited the further widening Brent-WTI spread, which rose above $9/b during the day, as the primary driver of the rally, giving the incentive to ship Bakken barrels south to the US Gulf Coast. S&P Global Platts assessed the July-delivered crude spread at $9.52/b -- the highest in more than three years.

Close to the oil wells in North Dakota, Williston-origin barrels for rail transport were heard traded as high as NYMEX WTI CMA plus 25 cents/b, a steep rise of $2.20/b from Tuesday's assessment. This was the highest differential since November 11, when it was assessed at NYMEX front-month WTI CMA plus 35 cents/b.

Williston barrels for delivery on the Dakota Access Pipeline were heard traded as high as NYMEX WTI CMA plus 20 cents/b.

Bakken crude in the Clearbrook, Minnesota, hub that supplies the Midwest market, meanwhile, was talked valued at a rare parity with Williston barrels, equivalent to a rise of $1.45/b day on day. This was the first time Williston barrels rose to parity with Clearbrook since S&P Global Platts started assessing the former in April 2014.

Much, much more at the link.

This might be a good time to write a thank you letter to Judge James Boasberg and all those who supported the DAPL.

Meanwhile, the Canadians are still trying to figure out how to get their landlocked bitumen out of Alberta, what with continuing challenges with the Keystone XL; Enbridge Line 3; Energy East pipeline; Trans Mountain. 

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on anything you read here or think you may have read here.

From the Financial Times:

US oil prices are falling well behind their international rivals, as booming shale production has created pipeline constraints, driving the biggest discount to North Sea Brent in three years. 

On Thursday (today), US benchmark West Texas Intermediate‘s discount to Brent crude moved above $11 a barrel, a level not seen since 2015, in the latest sign inland US crude markets have become swamped by rampant production. 

Brent was near $78 a barrel while WTI traded closer to $66, before recovering. Traders and analysts say WTI’s discount to Brent— known as the Brent-WTI spread in the industry — reflects pipeline constraints in two key areas that have intensified over the past three weeks. The discount was closer to $5 a barrel in early May.

The deep discount first appeared in the heart of the Permian Basin — the most prolific US shale field — around the city of Midland in west Texas. It has since moved to Cushing, Oklahoma, a tank storage hub that can also be a detour for Permian barrels flowing towards refineries and oil export docks on the coast of the Gulf of Mexico.

Traders have essentially maximised capacity on pipelines running out of Cushing to the Gulf Coast as US crude production has risen towards 10.5m barrels a day while demand for exports frequently tops more than 2m b/d.

Bakken? Not mentioned. And folks know. Memo to self: write letter to Judge James Boasberg.

Other sites of interest:

• daily Bakken spot price
• WTI-Brent spread 
• the Bakken-WTI-Brent spread back in 2012 (I have no idea what the photograph at the linked article has to do with the story)