Energy Journal: WTI Continues Its Comeback

July 4, 2013 by  
Filed under Solar Energy Tips

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The price gap between the world’s two crude benchmarks, Brent and West Texas Intermediate, shrank to its lowest level in 2½ years on Tuesday.

After increasing to more than $20 a barrel as surging U.S. oil production overwhelmed infrastructure and created a crude glut in Oklahoma, the gap between the two benchmarks fell to just $5 a barrel on Tuesday.

The gap is closing because pipelines and other infrastructure are now bringing new supplies of crude oil from North Dakota, Texas and other regions to consumers along the coasts, write The Wall Street Journal’s Jerry Dicolo and Sarah Jacob. The glut in the U.S. heartlands is easing, bringing domestic oil prices back in line with the rest of the world.

The flow of oil is improving to such an extent that WTI could actually regain its historic price premium to lower-quality Brent crude, say some analysts. Things have changed enough for Goldman Sachs to close its trading recommendation to buy WTI and sell Brent, reports Reuters.

This is all good news for coastal U.S. refiners, who finally have access to the oil bonanza in the country’s interior. Not so good for refiners in the Midwest, who are gradually losing the access to cheaper feedstock that has boosted their profits for several years.

Everyone is benefiting from the North American oil boom in one aspect, write the Journal’s Chip Cummins and Russell Gold. The growing supply cushion has moderated the market effect of recent oil outages in other parts of the world, such as the North Sea. That helps everyone from manufacturers to motorists by steadying fuel prices and making budgeting easier.

It also aids U.S. geopolitical goals. Without the boom in its own production, the U.S. would have had a much harder time forcing through tough new sanctions on Iran’s oil exports last year, said John Hannah, who advised Dick Cheney on national security when he was vice president.


The European Parliament voted Wednesday to delay the auctioning of 900 million carbon dioxide permits, having rejected a similar proposal in April.

The proposal is hoped to lift the cost of emitting carbon dioxide in Europe, following a collapse in prices on the Emissions Trading System because of a sharp drop in demand for electricity during the economic downturn.

Meanwhile, there was another flurry of not-so-good news for low-carbon energy.

German utility E.ON is pulling out of a research project into wave energy on the island of Orkney in Scotland, reports the BBC. The company behind the Pelamis wave power generator, which looks like a giant steel snake, said it would continue to proceed to commercial-scale operations, but the loss of a big financial backer can be problematic at an early stage of development of any technology.

Another big plank of low-carbon energy policy in the U.K.—a new fleet of nuclear reactors—continues to struggle to gain any momentum. After months of delay already, it may be a “few months more” before the U.K. government and Electricite de France—the operator of most nuclear power plants in the country—agree on a guaranteed electricity price that would allow construction of new reactors to proceed, reports Bloomberg.

One of China’s largest wind-turbine manufacturers, Sinovel Wind Group, will close four international subsidiaries that it deems to be lacking in development potential, writes Chuin-Wei Yap of the Journal. Sinovel denied the closures had anything to do with criminal charges filed in the U.S. accusing the company of stealing trade secrets, copyright infringement and wire fraud.

The embattled solar-power industry in the U.S. has come up with a novel new way to strengthen its position. After years of appealing for support from left-wing and environmental groups, the solar industry in Arizona is now courting Tea Party groups, writes the Journal’s Russell Gold. Where solar panels were once touted for being planet-friendly, they are now portrayed as symbols of self-reliance and consumer choice.


Boris Johnson, the mop-headed mayor of London who loves to grab a headline, says no stone in the U.K. should remain unfracked, including prime real estate in the country’s capital.

“If reserves of shale can be exploited in London, we should leave no stone unturned,” he wrote in a letter to the Times. “It’s time for maximum boldness on energy supply.”

Anti-fracking groups dismissed the mayor’s plans as a “fairy tale.” Mr. Johnson isn’t short of wacky schemes, notably a plan for a new airport in the Thames Estuary dubbed “Boris Island,” so serious minds could be forgiven for drawing the same conclusion about his support for urban shale gas development.

But sensible geologists say there is no technical reason why shale gas couldn’t be extracted from beneath London, reports Carbon Brief. However, before drilling rigs start rolling down the Strand, the little matter of public resistance will have to be overcome.


Nymex crude traded at its highest level in more than a year as investors expected falling U.S. inventories to provide support for the benchmark and push it closer to prices on the Brent contract. Read the Journal’s report here.

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