The premium for Bakken crude oil in Clearbrook, Minnesota, over Bakken crude oil in Guernsey, Wyoming, has been shrinking this month, due to easing demand in Clearbrook, sources said Thursday.
The premium was $2.80/b on March 1 and has declined steadily since then, according to Platts data, landing at $1.55/b on Wednesday for a drop of $1.25/b or 45% so far this month.
Bakken ex-Guernsey assessments have been relatively stable so far in March, with a low of WTI CMA minus $2.80/b and a high of WTI CMA minus $2.45/b to date. There were no issues reported in that time to indicate any major disruptions to market fundamentals.
Bakken ex-Clearbrook assessments, on the other hand, have been more volatile, with a low so far in March of WTI CMA minus $1/b and a high of WTI CMA plus 5 cents/b.
Bakken ex-Clearbrook was assessed at a premium to WTI CMA at the start of the month, the first premium in almost six months, which sources attributed to higher Syncrude prices in Canada, which themselves had been pulled up by upgrader outages. Upgraders typically take in various grades of crude, including Mixed Sweet crude in Canada, and "upgrade" the feedstock into synthetic crude production. Bakken ex-Clearbrook crude generally occupies and competes in the same supply pool as Mixed Sweet crude.
Some market sources attributed the subsequent decline in Bakken ex-Clearbrook prices this month to the market correcting itself after the uptick from outages.
One market source even described the high prices in Clearbrook at the start of March as "crazy." Other sources said competing Bakken crude blends also helped pull down Clearbrook prices recently.
Bakken in the Williston Basin -- located partially in North Dakota and partially in Canada -- also saw a price spike in the first week of March, following higher Clearbrook and Canadian crude prices. Logistically, the Williston Basin and Clearbrook are both better placed to supply Canadian crude, as Guernsey is located much farther south in Wyoming. During the first week of March, Bakken ex-Williston Basin was assessed March 2 at WTI CMA minus $5.80/b before jumping by $2.05 or 35% in the next session to WTI CMA minus $3.75/b, at the time the highest level in almost four months.
Bakken ex-Williston Basin was also heard traded six times in March so far, which, according to sources, is unusually high liquidity for the region.
"Liquidity sure has picked up in North Dakota," a market participant said.
