OKLAHOMA CITY (AP) — A prominent Oklahoma oilman says the high quality of U.S.-produced oil is reflected in its rising price on international markets.
U.S. oil is trading higher than the international standard for the first time since 2010 after President Barack Obama signed a measure last week lifting the nation’s four-decade ban on oil exports, the Oklahoman reported Friday (http://bit.ly/1kjEGmT ).
Domestic oil gained 60 cents to $38.10 a barrel on Thursday while oil produced elsewhere added 53 cents to close at $37.89.
Harold Hamm, CEO of Continental Resources, says it’s a sign that the world sees domestic light, low-sulfur oil as superior to international oil, much of which is denser and higher in sulfur.
“Now the premium quality of U.S. light sweet crude is being recognized globally and rewarded by the market,” said Hamm, chairman of the Domestic Energy Producers Alliance.
Most refineries in Europe and Asia are designed to handle primarily light sweet crude like that produced in the United States. Light sweet historically has traded at a premium to heavy sour blends.
But a rapid increase in domestic production over the past decade helped flip the prices, setting domestic prices below the international rate.
As pipeline and other infrastructure struggled to keep up with new domestic production, the spread between U.S. and international prices widened to as much as $30 a barrel.
New pipelines and the increased use of trains to transport oil alleviated the biggest glut in Cushing, Oklahoma, where domestic oil is priced, but the spread didn’t disappear.
The spread remained at about 10 percent until last month, when it gradually began to shrink. Some industry observers have attributed the decline to a growing belief that the export ban would be lifted. Others attributed it to slowing domestic production alongside an increase in production in Saudi Arabia and other parts of the Middle East.