The United States may now be the world's biggest crude producer, but the oi...
NEW YORK - The United States may now be the world’s biggest crude producer, but the oil being produced in its prolific Permian basin is increasingly too light in density for domestic refiners or for exports, eroding prices for these orphan barrels.
As those volumes increase and heavy crude supplies shrink, refiners are grappling with the mismatch in the density of oil they require and what the country produces, traders said. “That’s a big structural problem that’s not going to go away anytime soon. We’ve got this mismatch in the country,” Jennifer Rowland, analyst with Edward Jones said.As weekly U.S. crude production jumped to over 12 million barrels per day earlier this year, exports too soared to a record at 3.6 million bpd in week to Feb. 15, government data showed.
Other grades are not far behind. Plains All American’s Senior Vice President Jeremy Goebel said at a Houston conference two weeks ago that in two months’ time, the market will likely start trading West Texas Condensate , an even lighter oil than WTL. “With a greater number of active rigs, growth in the Delaware will continue to outpace that in the Midland,” which will boost supplies of discounted WTL, Drillinginfo said in an April blog post.