- Traders say Midland crude for delivery in Q4 is going for the smallest discount in months in anticipation of the opening of pipelines transporting more than 2M bbl/day from the Permian Basin, Reuters reports.
- Market participants bought WTI crude at Midland for Q4 delivery for a $0.75/bbl discount to U.S. crude futures this week, nearly $5 stronger than front-month sales, according to the report.
- Some traders say the discount may disappear entirely by early 2020, reversing a widening caused by lack of pipeline space; Midland crude had weakened to as much as an $18.15/bbl discount in August, the greatest in six years.
- Three major pipelines are scheduled to open over the next 18 months, lifting Permian pipeline capacity to ~5M bbl/day: the 900K bbl/day EPIC pipeline, the 670K bbl/day Cactus II pipeline owned by Plains All American Pipeline, and the 800K bbl/day Grey Oak pipeline owned by Phillips 66 (NYSE:PSX).
- Permian producers include EOG, PXD, LPI, FANG, SN, COG, CRZO, CXO, DVN, NFX, OXY, CVX, XOM, NBL, APC, APA, WPX, CDEV, REN, EGN, JAG, AXAS, HK, MCF, XEC, PE, SM, MTDR, QEP, AR
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