WTI discount to Brent may decline

[dan_s]

I was thinking about this last night and then this morning I got the note below from Keith Kohl who writes the Energy Investor newsletter.
The situation in Libya is getting worse and it could take a lot of light oil off the market. Most of Libya's oil exports go to European refiners. If the civil war in Libya does escalate, there is a good chance that there will be more demand for the ultra-light oil coming from the Permian Basin and Eagle Ford tight oil plays.
Today Brent is trading for about $71/bbl and WTI is trading for about $64/bbl. Saudi Arabia wants to push Brent to $80/bbl by the end of June and there is a good chance that happens, especially with the situations in Libya and Venezuela getting worse.
So...it now looks like Raymond James forecast that WTI will average $75/bbl in Q4 doesn't look "outlandish" like it did back in December.

The Dirty Little Secret to Making Money from U.S. Oil Exports
By Keith Kohl Written Apr. 10, 2019

Tick-tock, tick-tock goes the OPEC clock.

And make no mistake; higher oil prices are coming.

All the ducks are in a row, and they’re being knocked out one by one.

And the biggest catalysts for a crude spike this summer are all connected to OPEC.

We’ve been following the collapse of Venezuela’s oil industry for years, and it won’t take much more for the entire house of cards to topple. We’re even at the point that Russia has put boots on the ground to ensure the interest payments it’s owed (which are being paid in barrels) continue flowing.

But it was the latest action in Libya that gave us a fresh perspective on how vulnerable OPEC’s oil supply truly is.

A few days ago, one of Libya’s warlords, Khalifa Haftar, marched his troops into Tripoli. He’s already seized critical oil fields like the Al-Fil field, which produces over 70,000 barrels per day.

What’s interesting here is the quality of crude that Libya produces. Libyan oil is of the light, sweet variety that drillers in West Texas extract.

Some of you might recall that when Libya’s civil war broke out years ago, the Saudis calmed the international community and insisted that they would make up for any supply shortfalls.

Unfortunately, we soon learned that Saudi Arabia’s spare capacity wasn’t exactly the same quality refiners were used to, but rather a heavier grade that those refineries couldn’t handle.

I won’t pretend to know how this will play out. Nobody knows, especially the three governments in Tripoli claiming authority.

What I can tell you is that the world may soon be scrambling to find light, sweet oil.