[Nervous Tick]

I must not be smarter than a fifth grader, because it makes no sense to me why Colorado oil would be trading at such a discount to the world price.

Can anyone enlighten me?

[saganite]

post #9

[The_Victor]

because it makes no sense to me why Colorado oil would be trading at such a discount to the world price.

1) Local refineries are shut down.
2) Local oil is continuing to flow, thus piling up in storage facilities.

You have to sell in order to keep you storage tanks from overflowing. Refineries elsewhere in the US have already paid for oil delivered to their facility at the market rate. You have to sell so you have to accept their terms since you need them to buy your product more than the need it from you. Best price you can get is $26 below market.

[infominer]

Oil prices are based on a “standard” which is West Texas Intermediary (WTI)Crude (raw unprocessed oil). Crude or crude oil varies in price depending on sulfur and other components that cause a crude oil to vary from the chemical characteristics of West Texas Intermediary. Crudes other than WTI are priced inferior to WTI.

[roamer_1]

I must not be smarter than a fifth grader, because it makes no sense to me why Colorado oil would be trading at such a discount to the world price. Can anyone enlighten me?

Not enough local refining capacity/competition. It costs too much to ship the crude out, hence the glut.