Tags: gas | oil | prices | export

FT: Domestic Oil Prices Are Finally Ebbing Amid Production Boom

By John Morgan   |   Thursday, 07 Nov 2013 08:05 AM

Falling oil prices in the United States are having a growing impact on trading, as cheaper crude from the Gulf of Mexico is making its way across North America and the U.S. oil market is beginning to disconnect from the rest of the world, according to the Financial Times.

Strict regulations that discourage the export of crude oil from the United States to any countries other than Canada — which has its own oil production boom underway — are viewed as one factor in the price decline.

Low Gulf of Mexico prices are also starting to have a knock-on effect globally because the United States has been such an attractive market for overseas producers, the Times noted.

Editor’s Note:
Retirees Slammed with 85% Pay Cut (New Video)

The result is lower revenues for Middle Eastern and Latin American exporters, who sell crude to the United States at prices linked to Gulf Coast prices. Saudi, Iraqi and Kuwaiti export prices to the United States, for instance, declined $7 per barrel in October.

The Times said the International Energy Agency, energy company executives and former prominent former U.S. government officials are calling for regulations that discourage U.S. exports to be eliminated.

"The entire U.S. crude market is disconnecting from global prices because it is increasingly easy to move oil around the country, but impossible to get it out," David Welch, an analyst at JBC Energy, told the Times.

In order to find buyers, cheap Gulf of Mexico crude oil is now being shipped from the Gulf to eastern Canada, although some of it is making its way to refineries around New York and Philadelphia, and some is being shipped by rail to the east coast of the United States despite rail safety concerns.

Pump prices have now hit their lowest price in 2013, with the national average price for gasoline at $3.24 a gallon, with most of the country seeing local prices at some stations below $3 per gallon, CNBC reported.

Gasoline inventories are up 7 percent in the United States from a year ago, while demand has declined, CNBC said.

"There's little demand in the fourth quarter and plenty of supply out there. Fundamentals have finally taken center stage," said trader Anthony Grizanti of GRZ Energy.

A seasonal shift in gasoline processing has also helped pump prices drop. "It costs about 10 to 15 cents less to make the winter blend of gasoline than the summer blend," said AAA spokesperson Michael Green.

Gasoline prices nationwide are now at their lowest levels since 2010, according to CNBC.

Editor’s Note: Retirees Slammed with 85% Pay Cut (New Video)

Related Stories:

© 2015 Newsmax Finance. All rights reserved.

1Like our page

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved