Industrialized Cyclist Notepad


WTI catches back up to Brent
July 21, 2013, 00:23
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West Texas Intermediate crude became more expensive than Brent for the first time in almost three years as pipeline and rail shipments helped clear a bottleneck that reduced the price of the U.S. benchmark.

WTI hadn’t been higher than Brent since Aug. 17, 2010. The move was in intraday trading. WTI averaged $17.47 less than Brent in 2012 and traded as much as $23.44 lower than its European counterpart Feb. 8.

Improved pipeline networks and the use of rail links are helping to ease the North American oil glut created by rising production of crude from shale formations. WTI has jumped 18 percent this year, while Brent has decreased 2.5 percent as North Sea supplies stabilized after maintenance.

via WTI Crude Exceeds Brent for First Time in Almost Three Years – Bloomberg.



The Spread
February 13, 2013, 18:10
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thespread
click to enlarge

Blue is Brent, black is WTI, green is the spread between them.

A relatively recent phenomenon explained by James Hamilton:

West Texas Intermediate is a particular grade of crude oil whose price is usually quoted in terms of delivery in Cushing, Oklahoma. Brent is a very similar crude from Europe’s North Sea. As similar products, you’d expect them to sell for close to the same price, and up until 2010 they usually did. But an increase in production in Canada and the central U.S. combined with a decrease in U.S. consumption has led to a surplus of oil in the central U.S. This overwhelmed existing infrastructure for cheap transportation of crude from Cushing to the coast, causing a big spread to develop between the prices of WTI and Brent.

via Econbrowser: Prices of gasoline and crude oil.



EIA price predictions

Always kind of funny. Flat-line forever.

eiagaspricechart



VMT versus Brent
November 13, 2012, 23:48
Filed under: Uncategorized | Tags: , , , , ,


click to enlarge

1987-2012



US oil consumption and oil price in Brent

Via Stuart Staniford’s Early Warning:

http://earlywarn.blogspot.com/2012/04/us-oil-consumption-and-oil-prices.html

However, it’s also worth noting that the price required to make consumption decline has increased over time. In 2006-2007, prices of around $70 were enough to make oil consumption flatten and then decline. However, in late 2009 and 2010, similar prices obtained while consumption continued to rise. It took the rise to over $100 in spring 2011 to get consumption to start to decline again.



The Role of Speculation in Oil Markets

What have we learned so far?

A paper by Fatthouh, Kilian and Mahadeva (pdf)

Abstract: A popular view is that the surge in the price of oil during 2003-08 cannot be explained by economic fundamentals, but was caused by the increased financialization of oil futures markets, which in turn allowed speculation to become a major determinant of the spot price of oil. This interpretation has been driving policy efforts to regulate oil futures markets. This survey reviews the evidence supporting this view. We identify six strands in the literature corresponding to different empirical methodologies and discuss to what extent each approach sheds light on the role of speculation. We find that the existing evidence is not supportive of an important role of speculation in driving the spot price of oil after 2003. Instead, there is strong evidence that the co-movement between spot and futures prices reflects common economic fundamentals rather than the financialization of oil futures markets.



Chris Cook’s take on oil prices

…has little to do with geology, EROI and all that, and everything to do with manipulation by market players. An interesting take, although I don’t get on board with any analyst that completely ignores an entire wing of the mental hospital of energy ideas.

http://www.nakedcapitalism.com/2012/02/chris-cook-the-oil-end-game.html



TransCanada will build Gulf Coast leg of Keystone XL
February 27, 2012, 18:26
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Doesn’t need fed approval for that.

TransCanada said Monday that a 700,000 barrel-per-day Gulf Coast leg originally part of the Alberta-to-Texas Keystone XL proposal is now a separate $2.3-billion US project that doesn’t require a cross-border presidential permit. Obama denied Keystone XL a construction permit in January, following a delay of the project last November caused by an extension of U.S. environmental review.

The link between an oversupplied Oklahoma oil storage hub and the world’s largest refining market in Texas will help relieve a glut in crude supply in the U.S. Midwest upon startup in mid to late 2013, the company said.

via Update: TransCanada has “significant” commercial support for Gulf Coast pipeline: executive — Calgary Herald.



EIA’s latest oil price prediction

Via http://www.eia.gov/forecasts/aeo/er/early_prices.cfm

Consider in light of their historical track record, which has … not been good.



James Hamilton on crude oil and gas prices

My rule of thumb has been that for every $1 increase in the price of a barrel of crude oil, U.S. consumers are likely to pay 2-1/2 more cents for a gallon of gasoline.

Hamilton points to the lack of adequate pipeline infrastructure in the US to explain the gap between Brent and WTI.

via http://www.econbrowser.com/archives/2012/02/crude_oil_and_g.html




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