Texas and other states with large shale oil reserves pumps light oil with high quality and low sulfur content, creating an ever-increasing surplus that changes the structure of the industry world oil
Oil refiners, who have spent billions benefiting from processing cheap and low-quality oil, pay fabulous prizes to find heavy and high sulfur oil they need. This imbalance is good news for OPEC producers, such as Iraq and Saudi Arabia, which can not produce a lot of light oil and sulfur, but that they produce large amounts of oil products heavy
The crisis in Venezuela, along with a reduction in production at OPEC, will only aggravate this imbalance. Venezuela exports one of the highest levels of oil in the world, and sanctions recently announced by Trump will greatly complicate the transformation and export of crude oil. American refiners are looking for alternative suppliers as a matter of urgency.
"There are still some problem areas in our supply plan," said Gary Simmons, general manager of the United States oil refining company, Valero Energy Corp, for investors. We do not offer anything from Venezuela. "
Crude oil is different. To the west of Texas, the oil is similar to vegetable oil: liquid and easy to process. In the Venezuelan region of Orinoco, it is more like a jam, thick and difficult to process. Density is not the only difference; the content of sulfur is also important. L & # 39; oil is low in sulfur and sulfur content. Heavy oil in general contains more sulfur than light.
The tension persists
Since Saudi Arabia, Russia and Canada have reduced production volumes, and US sanctions force Venezuela and Iran to reduce exports, these changes could not affect the crude oil market. low quality
"In the real market, tensions continue to be due to a lack of high sulfur oil," said Amrita Sen, senior analyst at Energy Aspects Ltd. in the oil market, which reflects a widespread view of the market.
For consumers and politicians, focusing primarily on Brent and West Texas Intermediate brands, the most popular benchmarks may not be of particular importance. Drivers can even win, because excess oil from light and sulfur oil often leads to excessive gasoline and lower prices. On the other hand, the truckers can face a shortage of fuel, since the refiners prefer to use crude oil high in sulfur to produce diesel fuel.
Traders who market in the real petroleum market will be able to benefit from changes in prices that are among the different grades of oil.
Only a few managers of oil companies believe that the market situation will change in the near future. The imbalance between supply and demand may increase due to the reduction in production in OPEC: Saudi Arabia has warned that in February production will be further reduced. Recently, Saudi oil exports to the United States have fallen almost to a minimum in almost a decade.
"Due to the reduction in the production of OPEC, the shortage of crude oil that is high in sulfur will continue," said Alex Byrd, who deals with oil supplies to the commercial giant Glencore Plc.
Fluctuations in the price market
At the same time, the production of shale oil in the United States continues to grow, increasing the excess of light oil and low sulfur content. The proportion of light oil in total hydrocarbon production in the United States increased to almost 57% compared to 51% at the beginning of 2017, according to Bloomberg calculations from the data of the # 39; Administration of US energy information.
In the real market, the difference in petroleum prices for some important sulfur-rich grades, including the main exports of Russia and Mart Blend of the Gulf of Mexico, is the maximum of five years.
The Mars credit recently changed to $ 5.85 more than the US West Texas Intermediate benchmark, although a year ago it was cheaper to $ 1.60 per barrel. Previously, the HLS fat was more expensive than the LLS of related degree.
The Mars Blend Oil is quoted at a premium bonus for WTI.
"The members of OPEC have achieved the result they wanted in the real market, where the tension is increasing," said Marco Dunand, general director of Mercuria Energy Group Ltd.
Crude oil is becoming so expensive and the margin of refining of petrol is so low that some US refineries try to reduce the cost of harder production to save money. According to consulting company Oil Analytics Ltd, in the last days, the crackdown of high sulfur content in the most complex American refineries in Mexico Gulf has dropped to around $ 2.50 per barrel compared to an average of five years at 12 dollars per barrel.
Refineries need to be adapted almost in real time. According to the general manager of Valero, Joe Gorder, the company "changes its way of looking for crude oil every week trying to obtain the greatest possible net profit in its plants."
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