Bakken’s Discount to Brent Widens for First Time in a Week

Bakken crude’s discount to international benchmark Brent crude widened for the first time in a week.

The gap between Bakken priced in Clearbrook, Minnesota, and Dated Brent increased by $1.10 to $11.12 a barrel at 4:17 p.m. New York time, according to data compiled by Bloomberg.

Bakken competes with foreign oils priced off Brent for space in U.S. East Coast refineries, where companies such as PBF Energy Inc. and Philadelphia Energy Solutions have increased rail-unloading capacity to take the crude.

Bakken’s premium over U.S. benchmark West Texas Intermediate in Cushing, Oklahoma, slipped by 50 cents for the second straight day to $1.50 a barrel. The price in Clearbrook is higher than at wells in North Dakota and Montana because of gathering and transportation costs.

The Bakken-Brent discount has narrowed since reaching a 2012-record level of $34.77 on Oct. 30.

“The main reason for that is the takeaway capacity has been steadily ramping up over the course of the last six months,” said Christian O’Neill, Senior Energy Analyst with Bloomberg Industries in Princeton, New Jersey. “As more Bakken makes its way toward the coast, realizations have improved over where they’ve been historically, especially over the last year or to when it was trapped in the Midcontinent.”

Higher Production

Continental Resources Inc., Whiting Petroleum Corp. and others have used techniques like horizontal drilling and hydraulic fracturing to boost production in North Dakota to a peak of 770,000 barrels a day in December from less than 100,000 in July 2005.

The boom has helped the U.S. reverse a decades-long decline in oil production. The country produced 7.08 million barrels of oil a day in the first 13 weeks of the year, the most since 1992, EIA data show.

Gulf Coast grades slipped. Light Louisiana Sweet declined 75 cents to a $16 premium over WTI, and Heavy Louisiana Sweet lost 70 cents to $17.15 over the benchmark.

Mars Blend’s premium narrowed 50 cents to $11.80 a barrel while Poseidon slipped 25 cents to $12 over WTI.

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