US crude that's worth less than nothing
US crude that's worth less than nothing
© Lucy Nicholson / Reuters
The oil glut is so bad in the US that one buyer said it will have to be paid to take North Dakota’s low-quality crude.
The price list of Flint Hills Resources, a refining company owned by billionaire brothers Charles and David Koch, puts the price of North Dakota Sour at -$0.50 a barrel. This is a high-sulfur grade of crude, and in January 2014 cost $47.60, which is almost $20 more expensive than today’s price of the Brent benchmark.
High-sulfur oil is only a small part of North Dakota’s crude production at less than 15,000 barrels per day, John Auers, executive vice president at Turner Mason & Co. in Dallas told Bloomberg.
High-sulfur oil is usually cheaper because it has to be transported to plants that have specific equipment to remove the sulfur when processing.
“Telling producers that they have to pay you to take away their oil certainly gives the producers a whole bunch of incentives to shut in their wells,” Andy Lipow, president of Lipow Oil Associates in Houston told Bloomberg.
A spokesman for Flint Hills didn’t contact the media to explain the price list.
Canadian producers have also been hit by cheap oil. Canadian bitumen fell to $8.35 last week from $80 less than two years ago.
Brent oil has fallen from $115 to $28 per barrel since July 2014 as Saudi Arabia has attempted to corner the market and oust high-cost US shale oil.
© Lucy Nicholson / Reuters
The oil glut is so bad in the US that one buyer said it will have to be paid to take North Dakota’s low-quality crude.
The price list of Flint Hills Resources, a refining company owned by billionaire brothers Charles and David Koch, puts the price of North Dakota Sour at -$0.50 a barrel. This is a high-sulfur grade of crude, and in January 2014 cost $47.60, which is almost $20 more expensive than today’s price of the Brent benchmark.
High-sulfur oil is only a small part of North Dakota’s crude production at less than 15,000 barrels per day, John Auers, executive vice president at Turner Mason & Co. in Dallas told Bloomberg.
High-sulfur oil is usually cheaper because it has to be transported to plants that have specific equipment to remove the sulfur when processing.
“Telling producers that they have to pay you to take away their oil certainly gives the producers a whole bunch of incentives to shut in their wells,” Andy Lipow, president of Lipow Oil Associates in Houston told Bloomberg.
A spokesman for Flint Hills didn’t contact the media to explain the price list.
Canadian producers have also been hit by cheap oil. Canadian bitumen fell to $8.35 last week from $80 less than two years ago.
Brent oil has fallen from $115 to $28 per barrel since July 2014 as Saudi Arabia has attempted to corner the market and oust high-cost US shale oil.
