West Texas Intermediate and Brent crude oil

The spread between West Texas Intermediate and Brent crude has widened to around $3.50. The divergence is crucial because WTI’s discount to Brent can shift trade balances. When the spread hits $4, that typically makes the U.S. benchmark too cheap for international refiners to ignore and covers the cost of overseas transportation and storage. At the same time, American refiners tend to stop buying international crude, and the EIA can draw on its inventories.

All of this can shift trade balance dynamics at a time when U.S. exports have slowed. This move is happening as traders price in a premium for Brent due to Russia-related risk as preparations ramp up for a possible Russian invasion of Ukraine. The spread previously widened in August thanks to an improving global virus situation and increasing Chinese demand. That placed international benchmarks at a premium, only to reverse in light of European energy issues.

North Dakota Oil Boom Brings Bakken Price Bust

 Feb. 9 (Bloomberg) -- North Dakota’s booming oil industry is facing a market bust, at least for now.

     The price of oil extracted from the Bakken shale formation, home to the country’s largest continuous deposit, sank 23 percent during the past six trading days. Demand for the crude tumbled as seasonal maintenance got under way at Midwestern refineries, Cory J. Garcia, an analyst at Raymond James

Financial Inc., wrote in a Feb. 7 report.

     Bakken crude for Marchdelivery traded yesterday for $27 a barrel less than West Texas

Intermediate, the benchmark grade of U.S. oil. The discount wasthe biggest since Bloomberg started to compile the Bakken spotprice in October 2010.

     Bakken oil delivered to Clearbrook, Minnesota, settled at $71.71 a barrel yesterday, the lowest of 14 U.S. prices tracked by Bloomberg. WTI was the fourth lowest, based on shipments from

Cushing, Oklahoma.

     “We expect pricing to improve as refinery utilization picks back up,” Garcia said in the report. He cited Continental Resources Inc., Kodiak Oil & Gas Corp., Northern Oil & Gas Inc., Oasis Petroleum Inc. and Whiting Petroleum Inc. as the producers most affected by the market’s swings. Bakken’s price also influences refinery earnings at HollyFrontier Corp. and Tesoro Corp., the report said.

     Most of North Dakota’s oil production comes from Bakken, which also covers parts of South Dakota, Montana and Canada. The North Dakota portion of the formation yielded 469,805 barrels a

day in December, according to data compiled by the state’s Industrial Commission. Output jumped 72 percent from the last month of 2010.