Oil Prices

[dan_s]

From the Raymond James energy team based here in Houston:

"If oil prices ramped back up into the triple digits, you'd normally expect anguished press articles, CNN interviews at the gas pump, and even more demagoguery than normal about "energy independence" and "obscene oil company profits" from assorted Washington politicos. Time to wake up, America! The world of $100+/Bbl oil has already returned, you just don't realize it yet. What are we talking about? When you want to check the latest oil prices, your Bloomberg or Reuters screen will tell you that, as of Friday's close, it was $85.58/Bbl. While that's a factually correct answer for West Texas Intermediate (WTI) oil prices, the reality is that most of the rest of the world is already paying over $100/Bbl! As of Friday's close, Brent was trading at $100.60, Louisiana Light Sweet at $103.08, and Urals at $98.07. The purpose of this Stat is to review why this WTI oil price disconnect has happened and try to predict how long it will last."

[setliff]

is it possible that today's wti price is an indication of the gap with brent closing? after all wti can not possibly be affected by happenings in far east. Also, the percent jump by brent was far less than wti's.

so, any thoughts?

[dan_s]

I was talking to an experienced oil trader on Friday about the price differential between WTI and the price oil is selling for on the Gulf Coast (much closer to Brent).
He said that the transportation cost to get oil from Cushing, Oklahoma to the Gulf Coast refineries is $5 to $7 per bbl., so that should end up being the price difference.
It takes awhile for these things to sort out.

Also, ConocoPhillips could easily solve this problem. They have a 300,000 bopd pipeline going from Houston Ship Channel up to Cushing. If they reverse the flow the problem is solved. Of course, reversing the flow of a major pipeline is not a snap decision.

[dan_s]

Brent crude went over $110/bbl today. In fact, it trade as high as $111.85.

I appears that Libya has shut down half of their production and a much higher percentage of exports. 500,000 to 800,000 bopd has been taken off the market. Direct impact on Brent's market so it could go a lot higher.