, Columnist
Christmas Comes Early for Permian Refiners
A big local discount for oil is a boon to those who can move it.
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A good definition of Christmas for a commodities trader goes something like “this thing that costs X over here costs X+Y over there.”
Christmas has come way early in Texas. As I wrote here, the spread between crude oil priced in Midland, Texas – the heart of the Permian shale basin – and the international Brent crude benchmark has blown out from about $3.50 a barrel two months ago to almost $14 a barrel, the widest in about three years. The shale boom has run into logistical constraints, forcing an increasing amount of barrels in West Texas to be priced at a discount as they seek alternative (and more expensive) routes to market, such as rail-cars or trucks.