Wow, Wow, Wow -- Great Article On WTI-Brent Spread -- If You're Following The Bakken, This Is A Must Read -- November 7, 2017

This graph is an eye-opener:

And why is that important?

That's how important the DAPL was to the economy of North Dakota. I think I mentioned this on the blog once before: for many, many years I made donations to Native Americans in South Dakota but during the DAPL protest I sent them a note telling them I would no longer donate, and that they should quit sending me solicitations. Haven't heard from them since, and haven't donated since. Actions have consequences.

But I digress. The graphs are from an article at Bloomberg, "why WTI pries aren't going anywhere."

From the article:

While I emphasized the differences in speculative money flows to the Nymex West Texas Intermediate, or WTI, and Brent crude oil contracts, I didn't give the role of logistics the prominence it deserved. So here goes.

To recap, the spread between WTI and Brent crude prices began widening in late July and has recently blown out to about $6 or $7 a barrel.

Hurricane Harvey's disruptive impact in late August helped push that spread beyond $5. But it had been opening ahead of that and hasn't shown signs of closing since.
Besides Brent's international benchmark, Nymex WTI is suddenly trading at wide discounts to other benchmarks within the U.S., too.

Those premiums of roughly $5 to $6 for Louisiana Light Sweet and WTI delivered in Houston are big flags that something is up with the way oil is flowing within the U.S.
The Nymex WTI contract is settled physically at the pipeline and storage hub in Cushing, Oklahoma, which is hundreds of miles inland from the refining and export facilities along the Gulf Coast. The other  barrels, closer to the coast -- and, therefore, global markets -- are priced more in-line with Brent. Their premiums versus Nymex WTI jumped at the end of August as Hurricane Harvey's disruption kept barrels bottled up in Cushing.

But their continued strength and that other line on the chart above -- for barrels priced in North Dakota -- hint at other, more structural issues.

John Coleman, a senior analyst at Wood Mackenzie, points to the start-up of the Dakota Access pipeline in June. Dakota Access takes barrels from the Bakken down to Patoka, Illinois -- where they compete with barrels coming from Cushing. Better access to Midwestern refiners, as well as pipelines heading south from Patoka to ports on the Gulf Coast, helped close the Bakken discount to WTI and encouraged a bit more production in North Dakota.

Much, much more at the link. 

Military Action "Moves" Oil -- Slightly -- T+76, April 7, 2017

Oil:

• Brent: 55.24
• WTI: 52.15
• Spread: about $3.00

Active rigs:

	4/7/2017	04/07/2016	04/07/2015	04/07/2014	04/07/2013
Active Rigs	49	31	93	194	187

RBN Energy: how new Permian-to-Corpus gas pipelines will affect coastal flows.

Where might all that gas go? As we’ve said in many blogs, the Marcellus/Utica region has made the Northeast essentially self-sufficient when it comes to gas, and has been pushing other producers out of the Midwest, the Southeast and other areas. So in many ways it comes down to exports, and Agua Dulce is key, not only for pipeline exports to Mexico but for gas supplied to the LNG export terminals in Corpus Christi and, perhaps, to other planned LNG terminals up and down the coast from Corpus.

So it seems quite probable that at least two—and maybe all three—of the Permian-to-Corpus pipeline projects we’ve been discussing will advance to construction. The question then will be – how much of the  gas flowing on those pipes to Agua Dulce be exported, and how much will need to work its way up the Texas coast and battle Marcellus/Utica producers for Texas Gulf Coast Industrial Corridor customers? Now that’s an interesting question that we’ll consider in an upcoming blog.

Scott Adams: the Syrian gas attack persuasion.

Lost In Translation -- June 18, 2015

Compare the story at Bakken.com and the story is covers at The Street.

A screen shot of the last paragraph of the Bakken.com story:

Compare that with what The Street said (correctly), a screen shot:

Bottom line: WTI and Bakken crude are near parity for a number of reasons. This is one of two data points that will be interesting to note in the Director's Cut to be released tomorrow: price for Bakken crude oil in April, 2015.  

By the way, for newbies, how does $45 to $60 translate into almost $30?

When WTI was at $45 some months ago, the spread between WTI and Bakken was much worse, close to $15. In other words when WTI was $45 some months ago, Bakken was being sold for $30 (see January, 2015, below, for example).

Now, WTI and Bakken are near parity at $60. And that's the $30 increase seen for Bakken oil. 

Here is Bakken pricing as reported in the Director's Cut over the six months or so:

• May 13, 2015: $46.00
• One month ago, 2015: $36.25 (lowest since February, 2009, and January, 2015) (all-time high was $136.29 7/3/2008)
• April, 2015: $38.33
• March, 2015: $31.47
• February, 2015: $34.11
• January, 2015: $31.41
• December, 2014: $40.74
• November, 2014: $60.61
• October, 2014: $68.94
• Sept, 2014: $74.85
• August, 2014: $78.46

Price Spreads Among Various Crude Oils

Link here.

The gap between domestic oil (i.e., Bakken) and foreign oil (e.g., Brent) continues to widen.

I have never followed these spreads very closely but something tells me the spreads will become more interesting over time.

Enbridge will be flowing only sweet crude oil through its system starting soon.

Enbridge will be shutting down its main pipeline for scheduled maintenance on two separate occasions sometime between February and March, 2011.