WTI Now Up Over $70 Again -- May 8, 2018

WTI flirting with $71?

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How Did We Let This Happen?

From oilprice.com:

U.S. shale is growing so quickly that it is presenting new challenges for refiners. The quality and type of the oil mix, particularly in the U.S., is changing because of the gusher of oil coming from West Texas.

For years prior to the shale revolution, refiners made large investments into downstream assets that were equipped to handle medium and heavier types of oil. A lot of expected supply growth was coming from Canada’s oil sands, a type of oil that is particularly heavy. Integrated oil companies and refiners poured money into refineries, such as those along the Gulf Coast, equipped to handle heavier varieties.

But oil coming from U.S. shale basins, especially the Permian, is light and sweet. That is creating somewhat of a mismatch between available supplies and downstream capacity.