What causes a differential between crude oil prices?
In general, we don’t need a monopsonistic setting to explain crude differentials between WCS and WTI. In a competitive market, prices for the same product (oil, corn, etc.) can diverge in different markets for two reasons: (i) quality differences; and (ii) transactions cost. Moving crude by rail is expensive.
What is crude differential?
Heavy oil differential refers to the difference in weight, or gravity, of oil, and secondly to the resulting price differentials. It is also one of the sweetest crude oils, meaning it is more pure, containing relatively less sulfur content.
What is price differential in oil and gas?
Price Differential – The difference in price between an established benchmark and what is actually received at the lease or field (inclusive of adjustments for quality, energy content, transportation fees, and regional/local differentials). Common Industry Benchmarks. Term. Oil. Gas.
What are the different types of crude oil?
A partial list of global crude oil streams tested and inspected and tested by Intertek are shown below.
- Sweet Crude Oils.
- Sour Crude Oils.
- Light Crude Oils.
- Medium Crude Oils.
- Heavy Crude Oils.
- Sweet Light Crude Oil.
- Synthetic Crude oils.
Where does the best quality crude oil come from?
The best crude oil in the world is found in Malaysia. “Tapis, the Malaysian crude benchmark traded in Singapore, has for a long time held the title of the world’s most expensive grade.
Where does Alberta’s oil go?
Almost three-quarters of Alberta’s oil exports to the U.S. are still destined for the Midwest re-gion. Smaller amounts are sent to the U.S. Gulf Coast, East Coast, Rocky Mountain and West Coast regions.
Why is WCS oil so cheap?
Since the oil in WCS is much heavier than WTI (which is a light oil), and further away from main markets, WCS is priced at a further discount to WTI. Other oil streams produced from the oil sands are also priced at a discount to WTI or WCS. Producers’ revenues and royalties are based on the “bitumen netback” price.
What is the best grade of crude oil?
Qualities of High and Low-Quality Oils. Sulfur content and weight are the two qualities by which crude oil is typically judged. High-sulfur, heavy oils are the lowest quality and the least expensive on the global market. Low-sulfur, light oils bring the highest price because they are of the highest quality.
Who has the best quality crude oil?
The country with the highest oil production is the United States, which is responsible for producing more than 15,647,000 barrels per day. Venezuela is the country with the most crude oil reserves in the world: 303.81 billion barrels. The best-quality crude oil is found in Malaysia.
Why does Canada not refine its own oil?
Most of Canada’s domestic oil production happens in the Western Canada Sedimentary Basin (WCSB). This is due to higher transportation costs, limited pipeline access to western Canadian domestic oil, and the inability of refineries to process WCSB heavy crude oil.