• 3 hours Russia, Saudis Team Up To Boost Fracking Tech
  • 9 hours Conflicting News Spurs Doubt On Aramco IPO
  • 10 hours Exxon Starts Production At New Refinery In Texas
  • 12 hours Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 1 day Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 1 day Oil Gains Spur Growth In Canada’s Oil Cities
  • 1 day China To Take 5% Of Rosneft’s Output In New Deal
  • 1 day UAE Oil Giant Seeks Partnership For Possible IPO
  • 1 day Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 1 day VW Fails To Secure Critical Commodity For EVs
  • 1 day Enbridge Pipeline Expansion Finally Approved
  • 1 day Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 1 day OPEC Oil Deal Compliance Falls To 86%
  • 2 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 2 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 2 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 2 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 2 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 2 days Aramco Says No Plans To Shelve IPO
  • 5 days Trump Passes Iran Nuclear Deal Back to Congress
  • 5 days Texas Shutters More Coal-Fired Plants
  • 5 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 5 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 5 days Chevron Quits Australian Deepwater Oil Exploration
  • 6 days Europe Braces For End Of Iran Nuclear Deal
  • 6 days Renewable Energy Startup Powering Native American Protest Camp
  • 6 days Husky Energy Set To Restart Pipeline
  • 6 days Russia, Morocco Sign String Of Energy And Military Deals
  • 6 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 6 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 6 days India Needs Help To Boost Oil Production
  • 6 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 6 days Oil Throwback: BP Is Bringing Back The Amoco Brand
  • 6 days Libyan Oil Output Covers 25% Of 2017 Budget Needs
  • 6 days District Judge Rules Dakota Access Can Continue Operating
  • 7 days Surprise Oil Inventory Build Shocks Markets
  • 7 days France’s Biggest Listed Bank To Stop Funding Shale, Oil Sands Projects
  • 7 days Syria’s Kurds Aim To Control Oil-Rich Areas
  • 7 days Chinese Teapots Create $5B JV To Compete With State Firms
  • 7 days Oil M&A Deals Set To Rise

Here's Another Mysterious Oil Shipment

Something odd is afoot in the North American crude markets.

Previously I mentioned some strange shipments of crude taking place lately here. Like eastern Canadian White Rose oil going all the way to India for the first time ever.

Or Colombian oil being sold to Italy. Another first for the market. (Previously, such crude often went to the U.S.)

Now, a third mysterious shipment has emerged in as many weeks. This one from rural Alberta to Singapore.

Platts reports that Shell shipped Cold Lake heavy crude to the port of Vancouver on the Canadian west coast. And then loaded an Aframax tanker for delivery to Singaporean buyers.

Traders noted this is another first for the global crude markets. Singapore has never before purchased the Cold Lake blend.

So why is crude sailing to so many odd places recently?

The answer appears to be related to one factor: surging U.S. supply.

Oil output from American shale plays like the Eagle Ford and tight oil basins like the Bakken is exploding. With this new supply displacing several crudes that used to be shipped primarily to U.S. buyers.

Including a number of Canadian blends. The U.S. used to the be the go-to market for this oil. But today it simply can't compete with domestic supply.

We can see evidence of this phenomenon in today's oil prices. Ample North American oil supply is causing prices on the continent to drop relative to global crudes. That's the reason WTI crude is selling for $98 per barrel, while European Brent goes for more than $110.

Canadian prices are fairing even worse. Benchmark crude Western Canada Select is going for a meagre $71 per barrel today. And heavy crudes like Cold Lake sell at a discount to that price.

But unlike American producers, Canadian oil firms are allowed to export crude. And they are do so--seeking better pricing in international markets.

The question is: what will happen to American oil? Prices for U.S. Gulf Coast blends like Louisiana Light Sweet are dropping versus Brent. Something that never happened during previous falls in the WTI price.

Signalling that crude may be piling up in all corners of the U.S. now. Potentially meaning that un-exportable U.S. oil is going to sell at a discount to international prices for the foreseeable future.

Something to keep in mind for our energy investments the next while.

Here's to the Cold Lake conundrum,

By. Dave Forest




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News