• 4 minutes 2nd Annual Great Oil Price Prediction Challenge of 2019
  • 7 minutes Nucelar Deal Is Dead? Iran Distances Itself Further From ND, Alarming Russia And France
  • 10 minutes Don Jr. Tweets name Ukraine Whistleblower, Eric Ciaramella. Worked for CIA during Obama Administration, Hold over to Trump National Security Counsel under Gen McCallister, more . . . .
  • 13 minutes Shale pioneer Chesepeak will file bankruptcy soon. FINALLY ! The consolidation begins
  • 27 mins The 5 Scary New Rules Of Upside-Down Capitalism
  • 3 hours Hydrogen Hurdles in Japan
  • 6 hours Winter Storms Hitting Continental US
  • 8 hours U.S. Shale To Break Records Despite Bearish Rhetoric
  • 1 day More dumbed down? re Hong Kong Act of Congress
  • 19 hours PennEast Appealing Wacky 3rd Circuit Decision to Supreme Court
  • 21 hours Impeachment S**te
  • 2 hours Pope Proposes New Sin: Thou Shalt Not Destroy The Harmony Of The Environment
  • 1 day Petroleum Industry Domain Names
  • 19 hours Contaminated Oil
  • 19 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 1 day U.S. Shale Output may Start Dropping Next Year
  • 16 hours Aramco IPO magic trick
  • 1 day Crazy Stories From Round The World
  • 19 hours Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
Alt Text

Forget OPEC: China Now Moves The Oil Markets

The time that OPEC rhetoric…

Alt Text

Canadian Oil Prices Crash After Keystone Spill

Canadian crude continues to trade…

Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

More Info

Premium Content

Oil Sold for -$0.50 per Barrel. A Negative Price!

The oil markets are on edge with oil sinking into the $20s per barrel. And last week we reported on one place where oil is already trading in the single-digits. Canada’s bitumen is selling for just $8 per barrel.

But even that rock bottom price is higher than what one oil seller earned for a shipment recently. In a bizarre turn of events, Bloomberg reported that Flint Hill Resources, a refining unit owned by the Koch brothers, said that they would purchase sour crude from North Dakota for $-0.50 per barrel.

That’s right: a negative price. Oil has become so depressed that producers are paying buyers to take oil off of their hands. Related: Oil Prices Fall Again As Traders Remain Fearful Of Iranian Production

How can the oil price go negative? This specific type of crude is suffering from a perfect storm of bad news. Obviously, most of the blame has to do with WTI dropping to its lowest level in more than a decade. But the type of crude that Flint Hills is purchasing is sour, which means it has a high-sulfur content. That requires a different type of refining and thus fetches a lower prices. And more importantly, North Dakota Sour has a shortage of pipeline capacity, which further pushes down prices.

Enbridge, for example, does not allow North Dakota Sour on its pipeline system. As a result, North Dakota producers of the high-sulfur blend have had to find other ways to export their product out of state since 2011, often relying on expensive routes such as rail or trucks. That makes their oil even less competitive. Related: U.S. Crude Production Could Fall Harder Than Thought In 2016

To be sure, North Dakota sour only makes up a small share of the state’s oil output – only around 15,000 barrels per day. Most of the shale oil in the Bakken is sweet, or low in sulfur.

But for sour producers that have always sold their oil at a discount, the collapse of WTI has pushed their prices into negative territory. They are now having to pay buyers to take their oil.

“Telling producers that they have to pay you to take away their oil certainly gives the producers a whole bunch of incentive to shut in their wells,” Andy Lipow, president of Houston-based Lipow Oil Associates LLC, told Bloomberg.

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage



Leave a comment
  • Synapsid on January 18 2016 said:
    The $-0.50, we are told, was an error. It has been corrected to $1.50 (not negative).

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play