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.
Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.
