The price of West Texas Intermediate (WTI) exceeded Brent for the first time since July 2013 today, before closing at $48.63 – just $0.14 below its spot price counterpart. In an interview with Bloomberg, John Kilduff, a partner at Again Capital LLC, said, “Strong refinery utilization here is giving WTI support, while Brent is tied to the oversupplied European market.”
OAG360 featured an article yesterday on the high utilization rates of United States refineries, which said all five U.S. PADDS operated at 93.9% capacity in the latest Petroleum Balance Sheet Report. The tight market is expected to continue – many producers are projecting year-over-year growth increases in 2015 despite narrowing its operational focus and laying down rigs.
Beginning of the End?
More and more signs point to the end of the 40+ year old oil embargo.
Reuters reports that Petroleos Mexicanos, or Pemex, requested 100 MBOPD of light crude to be imported from United States soil. Imports to the U.S. from Pemex, on the other hand, are not expected to increase from last year’s average of 803 MBOPD. Charles Marshall, Vice President of MLP Equity Research for Capital One Securities, told Oil & Gas 360® last month that a simple swap of our light crude for Mexico’s heavy crude simply makes sense. “That seems like a good solution to help relieve the light crude supply glut, but the market can’t balance itself without removing such government restrictions,” he said in the interview.
The loosening of other oil exports is becoming more obvious, as Royal Dutch Shell (ticker: RDS.B) was granted government approval to ship condensate abroad. Shell joins Pioneer Natural Resources (ticker: PXD) and Enterprise Products Partners (ticker: EPD) as the only companies with permission to send their products internationally. The U.S. was on pace to export the most crude in history in 2014, based on data through October.
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