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Study Released December 20, 2012

Commodity Report - Crude Oil - November 2012

Prior to the shale and tight oil boom in the US and significant expansion of oil sands in Canada, the US and Canadian system for delivering crude oil to market was stable and relatively predictable. In general, the US and Canadian crude oil pipeline networks were originally designed for taking crude oil into the US Midwest. Then matters started to change as production started to rise, and pricing for WTI at the Cushing, Oklahoma hub, which had always run in close parity with Brent, started to disconnect. Discounts deepened, affecting essentially all inland lower-48 crude grades, as well as Canadian crude oils (since these are also priced off WTI). Since January 2011, these discounts have been steep and have been considered ‘structural’ (see Figure 1). This month’s article will delve into the issues that are behind this soaring discount..... Download full report.

November 2012