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Oil Prices Keep Falling, But a Strange Gap Persists

Bloomberg Businessweek -- Oil prices are down more than 20 percent since mid-March. Yet that hasn’t erased a strange anomaly in the market: the gap between two essentially identical types of oil. North American light, sweet crude, also known as West Texas Intermediate, trades just below $84 while its international equivalent, known as Brent, is priced at $97.

Why would two similar products sell for such different prices? The problem is getting hold of WTI and connecting supply with demand. The gusher of new domestic oil production coming out of shale deposits in North Dakota, Texas, and Oklahoma has outstripped the country’s pipeline capacity to move it around. The result is a supply glut that has built up in the middle of the country, lowering the price of WTI. Refineries along the Gulf Coast would love to get ..

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Submitted Jun 16, 2012 By: BurntOrange

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clpassenubye Champion Author Los Angeles Posts:3,359 Points:755,230 Joined:Mar 2011	Message Posted: Jun 17, 2012 4:13:48 PM Ignore clpassenubye Report Abuse ok
TXRanger09 Champion Author Dallas Posts:2,511 Points:892,150 Joined:May 2009	Message Posted: Jun 17, 2012 2:57:06 PM Ignore TXRanger09 Report Abuse Have we lost the only blueprint to build a refinery
WalRus49 Champion Author Boston Posts:4,080 Points:869,840 Joined:Nov 2010	Message Posted: Jun 17, 2012 2:19:13 AM Ignore WalRus49 Report Abuse More organized mayhem and pillage............
APlus Champion Author San Antonio Posts:3,918 Points:992,195 Joined:Apr 2007	Message Posted: Jun 17, 2012 12:52:43 AM Ignore APlus Report Abuse Find a way to transport & refine it!
esq262 Champion Author Asheville Posts:2,907 Points:649,465 Joined:Jul 2011	Message Posted: Jun 16, 2012 9:33:16 PM Ignore esq262 Report Abuse Agreed PathfinderSC
PathfinderSC Champion Author South Carolina Posts:9,526 Points:1,832,590 Joined:Mar 2008	Message Posted: Jun 16, 2012 8:07:15 PM Ignore PathfinderSC Report Abuse Gas still to high , Needs to come down in the $2.40 range.
gasmad666 Champion Author Illinois Posts:1,847 Points:393,270 Joined:Mar 2012	Message Posted: Jun 16, 2012 1:07:40 PM Ignore gasmad666 Report Abuse build the pipelines
mastermariner Champion Author Texas Posts:4,249 Points:494,800 Joined:Jun 2011	Message Posted: Jun 16, 2012 1:01:58 PM Ignore mastermariner Report Abuse Sounds great.
tnfran Champion Author Arizona Posts:4,388 Points:844,140 Joined:Dec 2010	Message Posted: Jun 16, 2012 11:46:52 AM Ignore tnfran Report Abuse Ok.
TripleHs Champion Author Austin Posts:3,355 Points:918,090 Joined:Oct 2009	Message Posted: Jun 16, 2012 11:10:04 AM Ignore TripleHs Report Abuse manipulations
northeast2 Champion Author New York Posts:3,849 Points:1,007,200 Joined:Mar 2008	Message Posted: Jun 16, 2012 10:56:50 AM Ignore northeast2 Report Abuse "This price gap has created an arbitrage opportunity for some enterprising oil traders. For those who can buy domestic oil cheaply and have the means—either by leasing barges or rail cars—to move it down to the Gulf Coast, they can make money by selling it to refineries at a higher price. The tighter that spread, the trickier that trade becomes. Yet $13 is still a big enough window to make it work." If we hadn't given up on railroads in this country, we wouldn't be in this mess. We wouldn't have the need for as much oil, and we'd have a rail transportation network to move the oil around.
knutzAL Champion Author Alabama Posts:2,248 Points:372,680 Joined:Feb 2012	Message Posted: Jun 16, 2012 10:23:27 AM Ignore knutzAL Report Abuse k
johntxx Champion Author Texas Posts:2,789 Points:617,295 Joined:Aug 2011	Message Posted: Jun 16, 2012 10:14:23 AM Ignore johntxx Report Abuse From article: "Gheit points out that as long as WTI stays above $70, drilling companies can still make money producing new wells, which in turn, he says, will keep WTI anywhere from $8 to $12 below the price of Brent." As I have continued to say, the $70-$80 range for WTI is reasonable. Enough for a profit on drilling and exploration, but low enough to not gouge consumers.
07skydriver Champion Author Ohio Posts:3,266 Points:984,080 Joined:Feb 2009	Message Posted: Jun 16, 2012 9:56:01 AM Ignore 07skydriver Report Abuse Are 'ya skeered yet?
mitt4prez Champion Author Tacoma Posts:1,752 Points:1,247,175 Joined:Nov 2007	Message Posted: Jun 16, 2012 9:44:37 AM Ignore mitt4prez Report Abuse A great reply to the idiotic, "We've drilled and prices dint fall 99% immediately so it's all rigged by Big Oil, vote for Obama." line of the National Resources Defense Council.
werich44 Champion Author California Posts:1,862 Points:469,930 Joined:Jun 2011	Message Posted: Jun 16, 2012 9:05:34 AM Ignore werich44 Report Abuse Big oil + Politicians = Greed
gandalfthegrey1 Champion Author Houston Posts:1,184 Points:384,785 Joined:Feb 2011	Message Posted: Jun 16, 2012 9:02:22 AM Ignore gandalfthegrey1 Report Abuse So why aren't we building KXL? Why aren't building more refineries? It's obummer's fault period. Even when you consider all the other factors that have a role, it still boils down to a president w/ tunnel vision and bad policy.
blupupher Champion Author Houston Posts:3,555 Points:749,020 Joined:Feb 2011	Message Posted: Jun 16, 2012 8:49:57 AM Ignore blupupher Report Abuse interesting.
dave27johnson Champion Author Chicago Posts:1,790 Points:410,260 Joined:Feb 2012	Message Posted: Jun 16, 2012 8:35:58 AM Ignore dave27johnson Report Abuse A gap that is easy to explain.
BuckyTJones Champion Author Salt Lake City Posts:4,932 Points:967,950 Joined:Mar 2010	Message Posted: Jun 16, 2012 8:29:15 AM Ignore BuckyTJones Report Abuse If you had a choice of living on a million a year or 5 million, witch would you choose?
investmentdr Champion Author Cleveland Posts:4,034 Points:1,456,025 Joined:Sep 2008	Message Posted: Jun 16, 2012 8:27:07 AM Ignore investmentdr Report Abuse buy refiner stocks
Norm10 Champion Author British Columbia Posts:3,342 Points:162,925 Joined:Dec 2010	Message Posted: Jun 16, 2012 8:24:01 AM Ignore Norm10 Report Abuse Its called "profit taking".
doeslayersr Champion Author Illinois Posts:9,121 Points:872,980 Joined:Dec 2010	Message Posted: Jun 16, 2012 7:35:50 AM Ignore doeslayersr Report Abuse Yet another reason to proceed with the pipeline.
Nicoalbum Champion Author Ottawa Posts:6,027 Points:1,190,000 Joined:Jan 2010	Message Posted: Jun 16, 2012 7:28:29 AM Ignore Nicoalbum Report Abuse Nothing is strange, European oil is out of reach of American markets, and the entire premium goes to the oil barons.
merlinCO Champion Author Colorado Posts:1,645 Points:342,370 Joined:Mar 2012	Message Posted: Jun 16, 2012 7:23:53 AM Ignore merlinCO Report Abuse I am in the middle of the country with reduced crude prices, but our retail prices are above average......
Xavier80 Champion Author Victoria Posts:1,783 Points:379,415 Joined:Apr 2012	Message Posted: Jun 16, 2012 7:14:51 AM Ignore Xavier80 Report Abuse That's good
TomT2Lee Champion Author Cincinnati Posts:5,357 Points:1,598,730 Joined:Sep 2005	Message Posted: Jun 16, 2012 7:09:44 AM Ignore TomT2Lee Report Abuse The vast majority of Americans have been completely brainwashed by the main stream media and have no clue how close the economy is to a break down.
gs7101 Champion Author San Antonio Posts:5,528 Points:388,895 Joined:Jun 2009	Message Posted: Jun 16, 2012 7:04:36 AM Ignore gs7101 Report Abuse Falling oil prices is good!
farmboyTN Champion Author Tennessee Posts:2,267 Points:450,285 Joined:Feb 2012	Message Posted: Jun 16, 2012 6:59:39 AM Ignore farmboyTN Report Abuse ok
Evilmaddog Champion Author British Columbia Posts:3,327 Points:958,525 Joined:Aug 2010	Message Posted: Jun 16, 2012 6:57:29 AM Ignore Evilmaddog Report Abuse still paying like its $145/barrel
humblepie Champion Author Toledo Posts:34,271 Points:2,372,345 Joined:Mar 2006	Message Posted: Jun 16, 2012 6:38:02 AM Ignore humblepie Report Abuse doomberg cant figure it out ? must be really simple solution
molebaby96 Champion Author Tallahassee Posts:2,126 Points:506,890 Joined:Nov 2011	Message Posted: Jun 16, 2012 6:35:07 AM Ignore molebaby96 Report Abuse Also a Gap at the pump.
grandpadon28110 Champion Author Charlotte Posts:4,721 Points:1,143,285 Joined:Sep 2008	Message Posted: Jun 16, 2012 6:27:11 AM Ignore grandpadon28110 Report Abuse Gas will come down.