Outstanding bit of arbitrage!
From: Bearcatbob 8/21/2011 9:40:49 AM of 155838
Crude oil shipment is first for Tulsa Port of Catoosa
By KYLE ARNOLD World Staff Writer
Published: 8/20/2011 2:25 AM
Last Modified: 8/20/2011 4:16 AM
tulsaworld.com
Crude oil is being shipped out of the Tulsa Port of Catoosa for the first time in history, thanks to a strange disparity in oil prices between Oklahoma and the Gulf of Mexico.
On July 29, PetroSource LLC shipped 45,000 barrels of crude oil from various suppliers down the Verdigris River on the McClellan-Kerr Arkansas River Navigation System. The company, which is an oil and gas accounting firm with a terminal at the Tulsa Port of Catoosa, is looking to make another shipment soon.
Usually it's not profitable to ship oil down the waterway, but refiners along the Gulf Coast have been paying top dollar for imported oil. Brent Crude, a North Sea product priced on the IntercontinentalExchange, closed at $108.91 a barrel in trading Friday, $26.35 higher than West Texas Intermediate, the benchmark crude from North American drilling.
"We thought we could do it and make a profit at $14," said Rex Gilbreath, a partner with PetroSource. "But now it's much higher than that."
The disparity comes from excessive inventory coming into U.S. terminals and low demand domestically. Meanwhile, international oil is selling for higher prices because of demand growth in such developing counties as China and India.
Capacity to move crude oil in the United States is lacking somewhat, and Gulf Coast refiners are clamoring for more product.
Gilbreath said the oil is coming from various suppliers as far away as North Dakota. The company is hoping to make another shipment as soon as maintenance along the Arkansas River is completed.
"It's such a weird thing that's happening," Gilbreath said. "The numbers just work in our favor right now."
Shipping via the waterway is easier and cheaper than by rail or truck, he said.
PetroSource has a terminal at the Tulsa Port of Catoosa and regularly uses the waterway to ship other products.
Several companies at the port's industrial complex ship gasoline, asphalt and other petroleum products on the waterway, but the crude shipment is a first, said port director Bob Portiss.
"The fact that crude oil is being shipped from the port is further evidence of the important benefit waterway transportation provides to our economy by providing a link between the Gulf of Mexico and products originating from the north and west of our region," said a statement by Ed Fariss, chairman of the City of Tulsa-Rogers County Port Authority.
Read more from this Tulsa World article at tulsaworld.com |
