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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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REPLIES (newest first) Post a Reply
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clpassenubye
Champion Author Los Angeles

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Message Posted: Jun 17, 2012 4:13:48 PM

ok
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TXRanger09
Champion Author Dallas

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Message Posted: Jun 17, 2012 2:57:06 PM

Have we lost the only blueprint to build a refinery
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WalRus49
Champion Author Boston

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Message Posted: Jun 17, 2012 2:19:13 AM

More organized mayhem and pillage............
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APlus
Champion Author San Antonio

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Message Posted: Jun 17, 2012 12:52:43 AM

Find a way to transport & refine it!
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esq262
Champion Author Asheville

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Message Posted: Jun 16, 2012 9:33:16 PM

Agreed PathfinderSC
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PathfinderSC
Champion Author South Carolina

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Message Posted: Jun 16, 2012 8:07:15 PM

Gas still to high , Needs to come down in the $2.40 range.
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gasmad666
Champion Author Illinois

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Message Posted: Jun 16, 2012 1:07:40 PM

build the pipelines
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mastermariner
Champion Author Texas

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Message Posted: Jun 16, 2012 1:01:58 PM

Sounds great.
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tnfran
Champion Author Arizona

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Message Posted: Jun 16, 2012 11:46:52 AM

Ok.
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TripleHs
Champion Author Austin

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Message Posted: Jun 16, 2012 11:10:04 AM

manipulations
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northeast2
Champion Author New York

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Message Posted: Jun 16, 2012 10:56:50 AM

"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.
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knutzAL
Champion Author Alabama

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Message Posted: Jun 16, 2012 10:23:27 AM

k
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johntxx
Champion Author Texas

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Message Posted: Jun 16, 2012 10:14:23 AM

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.
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07skydriver
Champion Author Ohio

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Message Posted: Jun 16, 2012 9:56:01 AM

Are 'ya skeered yet?
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mitt4prez
Champion Author Tacoma

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Message Posted: Jun 16, 2012 9:44:37 AM

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.
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werich44
Champion Author California

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Message Posted: Jun 16, 2012 9:05:34 AM

Big oil + Politicians = Greed
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gandalfthegrey1
Champion Author Houston

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Message Posted: Jun 16, 2012 9:02:22 AM

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.
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blupupher
Champion Author Houston

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Message Posted: Jun 16, 2012 8:49:57 AM

interesting.
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dave27johnson
Champion Author Chicago

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Message Posted: Jun 16, 2012 8:35:58 AM

A gap that is easy to explain.
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BuckyTJones
Champion Author Salt Lake City

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Message Posted: Jun 16, 2012 8:29:15 AM

If you had a choice of living on a million a year or 5 million, witch would you choose?
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investmentdr
Champion Author Cleveland

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Message Posted: Jun 16, 2012 8:27:07 AM

buy refiner stocks
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Norm10
Champion Author British Columbia

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Message Posted: Jun 16, 2012 8:24:01 AM

Its called "profit taking".
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doeslayersr
Champion Author Illinois

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Message Posted: Jun 16, 2012 7:35:50 AM

Yet another reason to proceed with the pipeline.
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Nicoalbum
Champion Author Ottawa

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Message Posted: Jun 16, 2012 7:28:29 AM

Nothing is strange, European oil is out of reach of American markets, and the entire premium goes to the oil barons.
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merlinCO
Champion Author Colorado

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Message Posted: Jun 16, 2012 7:23:53 AM

I am in the middle of the country with reduced crude prices, but our retail prices are above average......
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Xavier80
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Message Posted: Jun 16, 2012 7:14:51 AM

That's good
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TomT2Lee
Champion Author Cincinnati

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Message Posted: Jun 16, 2012 7:09:44 AM

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.
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gs7101
Champion Author San Antonio

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Message Posted: Jun 16, 2012 7:04:36 AM

Falling oil prices is good!
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farmboyTN
Champion Author Tennessee

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Message Posted: Jun 16, 2012 6:59:39 AM

ok
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Evilmaddog
Champion Author British Columbia

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Message Posted: Jun 16, 2012 6:57:29 AM

still paying like its $145/barrel
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humblepie
Champion Author Toledo

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Message Posted: Jun 16, 2012 6:38:02 AM

doomberg cant figure it out ?
must be really simple solution
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molebaby96
Champion Author Tallahassee

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Message Posted: Jun 16, 2012 6:35:07 AM

Also a Gap at the pump.
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grandpadon28110
Champion Author Charlotte

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Message Posted: Jun 16, 2012 6:27:11 AM

Gas will come down.
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