September 24, 2020 – OilPrice.com
How The Oil Crash Solved The Permian Pipeline Problem
By Tsvetana Paraskova
Oil producers and oil infrastructure developers in the Permian – as well as everyone in the world – were taken by surprise in a “global pandemic that would substantially slow economic activity in much of the industrialized world, especially the U.S.; annihilate demand for jet fuel, motor gasoline, and (to a lesser degree) diesel; and spur the U.S. refinery sector to reduce their utilization rates to less than 70%,” RBN Energy said this month.
New pipelines, production curtailments, changed forecasts, and reduced capex by producers have “significantly altered crude oil and natural gas market fundamentals,” in the Permian, RBN Energy added.
The excess Permian pipeline capacity has helped raise the price of oil in Midland, Texas, to the levels of the WTI traded in Cushing, closing the double-digit dollar discount of Midland oil from early 2018 when crude takeaway capacity in the Permian was severely constrained. These days, producers who don’t have contracts to ship their crude at fixed prices could sell their Permian crude at prices similar to the U.S. benchmark. This could be some, but not enough, consolation for producers, considering that WTI Crude is struggling to hold onto the $40 a barrel handle these days.
Read the full article here: https://oilprice.com/Energy/Crude-Oil/How-The-Oil-Crash-Solved-The-Permian-Pipeline-Problem.html