Spread narrows

The latest North Dakota crude production estimates for July 2013 show a year on year increase of 200 Mb/d to a new record of 874 Mb/d. If you add Montana and South Dakota production (80 Mb/d) the Williston Basin is getting close to 1 MMb/d. After going through a famine of pipeline capacity in 2012, producers turned to rail to get their barrels to market. By the end of 2013 there will be 1.5 MMb/d of rail and pipeline takeaway capacity - more than enough to handle expanding output. Today we review the latest Bakken numbers.

The West Texas Intermediate (WTI) discount to Brent has been as wide as $27/Bbl in the past two years and traded at an average of $17.50/Bbl in 2012. Since February this year the spread has narrowed 80 percent to less than $5/Bbl – closing at $4.55/Bbl on Friday (July 5, 2013). Surging WTI prices are over $100/Bbl for the first time since May 2012.Today we look at what is behind the recent sudden narrowing in the spread.