Lone Star State Makes it Inside the Bubble

September 26, 2014 By

September 26, 2014


Crude oil prices in the Texas tight oil producing regions are suffering from the same over-supply problem as the Mid Continent. There’s a lot of crude oil in Texas and prices reflect the oversupply. For that reason, the Bubble has been stretched a bit to include the Lone Star State. Prices for WTI-Midland and Eagle Ford reflect the cost of transporting the last barrel out of the tight oil producing regions in Texas to market on the Gulf Coast.

On Thursday with WTI priced at $93 per barrel, Eagle Ford and WTI-Midland were listed at $4 under WTI. Bakken at Clearbrook came in at $5 under WTI. While Western Canadian Select continues to show a double-digit discount of $14 under WTI.

While we’re seeing discounts in the Mid Continent, differentials on the coasts have narrowed. The price of Brent is at it’s lowest since July 2012 due to falling demand in Europe and China, significant production from Libya, and falling imports to the U.S. On the West Coast, Alaska North Slope is at $2 over WTI. San Joaquin Valley Heavy is discounted at $4 under WTI. Bakken, supplied to PNW refineries via rail, has pushed ANS out of the Pacific Northwest and into California. There, it has to compete with SJVH bringing down both prices.

Sources: OPIS, Reuters, Plains All American Pipeline Price Bulletin, Oil Patch Hotline