May 4, 2018 - Bloomberg -
Permian crude prices steeply discounted relative to Houston
Oil and sand competing for same Permian rail resources
Oil producers may be getting in their own way in the race to pump crude from the fertile Permian Basin.
Railcars full of sand have helped producers unlock record amounts of crude in the Permian Basin, pushing regional prices well-below the going rate on Gulf Coast. Pipelines needed to carry the oil to the market are full and the railroads are backed up with sand shipments.
The stakes are high. Spot crude at Midland, Texas, in the heart of the Permian is trading about $15 a barrels below the grade of oil in Houston. This discount more than covers cost to ship crude by rail to the coast, so theoretically, oil traders stand to make about $7 a barrel if they can arrange for rail transportation to Houston.
Read more: https://www.bloomberg.com/news/articles/2018-05-04/not-enough-west-texas-railroads-to-handle-both-oil-and-sand
Permian crude prices steeply discounted relative to Houston
Oil and sand competing for same Permian rail resources
Oil producers may be getting in their own way in the race to pump crude from the fertile Permian Basin.
Railcars full of sand have helped producers unlock record amounts of crude in the Permian Basin, pushing regional prices well-below the going rate on Gulf Coast. Pipelines needed to carry the oil to the market are full and the railroads are backed up with sand shipments.
The stakes are high. Spot crude at Midland, Texas, in the heart of the Permian is trading about $15 a barrels below the grade of oil in Houston. This discount more than covers cost to ship crude by rail to the coast, so theoretically, oil traders stand to make about $7 a barrel if they can arrange for rail transportation to Houston.
Read more: https://www.bloomberg.com/news/articles/2018-05-04/not-enough-west-texas-railroads-to-handle-both-oil-and-sand