Breitling Energy CEO Chris Faulkner Featured in Oil Buyers Guide 2013 Review (bloombergbriefs.com)

 

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STORY OF THE YEAR: THE SPREAD

The price gap between the world’s two biggest oil benchmarks probably will narrow this year as U.S. exports of refined fuels reach a record and crude supply from the Middle East and North Africa recovers.

West Texas Intermediate, the U.S. benchmark, will average $6 a barrel less than Europes Brent in 2014, form almost $15 accord to Commerzbank AG. Goldman Sachs Group In. is predicting $9 and Barclays Plc $8.

While the U.S. is pumping the most crude oil in a quarter century, laws prohibit most exports, driving down costs for domestic refiners and spurring record shipments of everything from diesel to gasoline. The forecasters expect Brent prices to weaken as regional supply.

Brent Futures for February settlement on ICE Futures Europe in London closed at $106.75 a barrel on Monday, for example, $14.95 more than the corresponding WTI contract on the New York Mercantile Exchange. The spread averaged $10.65 last year, reaching as high as $23.44 on Feb. 8.

WTI also may rise because of expanding pipeline capacity from Cushing, Oklahoma, where the crude is priced, to America’s refining hub on the Gulf Coast Stockpiles of 40.7 million barrels at Cushing are 21 percent lower than a year ago, government data show.

WILL THE SPREAD NARROW?

“Ask me that question again in 15 minutes! I think the spread will narrow, but it just widened a little again on the news of disappointing U.S. production and inventory and ongoing issues in the Middle East. We could be seeing an upside bias on WTI crude soon due to a number of factors, including the opening of the southern leg of Keystone XL, talk of lifting the crude export ban, and re-opening of the Sharara oil field in Libya there are so many factors that come into play in world markets, I don’t think anyone can say with certainty one way or the other.”

– Chris Faulkner, CEO of Breitling Energy

By Grant Smith, Bloomberg News

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