2012 June 29

The Master Resource Report  2012-06-29

Sample of global oil prices

The media in the U.S. reports the price of oil daily but that single WTI price quoted can be very misleading. For example as this report has mentioned many times the acquisition price paid by refiners in the U.S. can vary widely from the reported WTI price and it is that acquisition price that determines the price of gasoline and diesel.

Here are some other oil prices quoted this week that illustrate the wide range based on both geographic location and the quality of the oil produced.

North Dakota Bakken spot priced for delivery to Clearbrook, Minnesota     $63.69/b

Western Canadian Select (WCS)    $62.63/b

Cold Lake Blend (bitumen blend)   $62.52/b

West Texas Intermediate (WTI)      $79.37/b

Brent spot                $92.62/b

Malaysian Tapis     $96.00/b

Opec Basket            $90.91/b

The most important issue that arises from these prices is cost of production and whether the producers can make a decent return on capital in those areas experiencing sub $65 per barrels. If these prices persist it will be interesting to watch how capital expenditures will be adjusted as the year progresses.

Finally given the steep rebound in prices today with positive news out of Europe it indicates that supply and demand may be in much tighter balance than many prognosticators understand. Signs of economic improvement could quickly bring prices up into the triple digit range again.