For instance, oil production in Texas’ Eagle Ford Shale jumped 74% year over year in February, reaching an all-time high. According to Heminger, the new projects simply won’t be enough to keep up with the rapid growth in output from these states. “We think you’ll see the spread widen back out,” he said.
If he’s right, Mid-continent refiners’ elevated profitability should continue. If he’s wrong, on the other hand, and the spread remains narrow, it could spell trouble for some rail companies. Generally speaking, with a spread near $8 per barrel, it likely isn’t very profitable to ship crude from North Dakota’s Bakken Shale to refineries along the East Coast for most rail carriers.
The article Will the Brent-WTI Spread Narrow Further? originally appeared on Fool.com and is written by Arjun Sreekumar.
Motley Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Enterprise Products Partners L.P. and Magellan Midstream Partners, L.P. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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