In the first week of this month, crude oil prices in the Bakken crashed. We talked about the development here in Back to the Future – What happened to Bakken and Canadian Crude Prices? At one point, the Bakken was trading $45/bbl under Brent. It is not over yet. Prices at Clearbrook, MN are still $26/Bbl under Brent. Was it just a rogue wave? What can we learn from this market event? And how can we recognize the onset of similar disruptions in the future?
For the reader who may not be familiar with the geography of Bakken crude flows, let’s look at the pipeline network. There are two – and only two -- ways out of ‘Dodge’, so to speak. See the map below. Crude oil moves east through Clearbrook, Minnesota and then south to the Midwest refinery centers. Or it moves south to Guernsey, Wyoming, then to Rockies refineries and to those same Midwest refinery centers.
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