WTI Slips to $88.90, Bakken Discount Widens; Natural Gas Climbs
Oil prices are mixed as a drawdown in U.S. crude stocks is offset by broader market pressure, while strong natural gas and a widening Bakken discount create a complex local outlook.
West Texas Intermediate crude oil prices edged lower on Wednesday, October 7, trading at $88.90 per barrel, a drop of $0.54 or 0.6%. In contrast, the international benchmark Brent crude rose 0.23% to $100.81 per barrel. The price for Bakken crude at Clearbrook, Minnesota, was at a discount of $3.42 per barrel versus WTI, according to midday price data.
The day's price movement for WTI came despite new government data showing a drawdown in U.S. commercial crude oil inventories. According to the U.S. Energy Information Administration (EIA), stockpiles decreased by 3.2 million barrels for the week ending October 2, bringing levels to 424.1 million barrels. Despite the draw, inventories remain about 1% above the five-year average for this time of year, as reported by OilPrice.com.
Other inventory data presented a mixed picture. The EIA reported distillate fuel inventories, which include diesel, were essentially unchanged and now stand 12% below the five-year average, indicating tighter supplies for that refined product. Gasoline inventories saw a small build of 400,000 barrels. Total product supplied, a proxy for demand, averaged 21.1 million barrels per day over the last four weeks, up 0.7% year-over-year.
Natural gas prices showed strength, rising $0.12 to $3.23 per million British thermal units. The price move comes as executives from oil and gas firms provided their outlook for future Henry Hub natural gas prices in the latest Dallas Fed Energy Survey, according to a summary from Rigzone.
For Bakken operators, the market presents contrasting signals. The widening discount for Bakken crude versus WTI directly impacts the netback received for oil produced in the region, potentially squeezing margins. However, the concurrent rise in natural gas prices offers a brighter spot for producers with significant associated gas production, improving the economics of wells where gas is captured and sold. The below-average distillate inventories and steady overall demand may support refinery runs and, ultimately, demand for crude feedstocks like Bakken.
Source
LIVE PRICE DATA; OilPrice.com; Rigzone
