Permian drillers are selling new lighter crude oil grade
Oil producers in the Permian Basin have started selling a new stream of light crude, said people familiar with the matter, securing a market for the increasingly less dense oil being pumped from the largest U.S. shale play.
Sales of West Texas Intermediate Light, or WTI Light, started in September with deliveries into Midland, Texas, the people said. Most of the supply for WTI Light would likely be coming from more recently drilled parts of the region, such as Loving and Culberson counties, with initial volumes estimated at around 100,000 barrels a day, they said.
The new stream is being primarily blended to produce so-called Domestic Sweet crude, WTI Midland or benchmark WTI for delivery at Cushing, Oklahoma, the people said. While lighter oil is typically higher-priced, the new grade is being sold at a discount to WTI Midland, the people said.
Separating the light grades would ensure a more consistent specification for the premium crudes, said Sandy Fielden, director of research for the commodities and energy group at Morningstar Inc. There’s a lot of relatively light streams coming out of the Permian, particularly the Delaware Basin, where most of the new drilling is taking place, he said, told Bloomberg.
"Typically, people try and blend the lighter crude with heavier streams," Fielden said. "But because there’s more light oil, the genuine WTI Midland gets a premium because that’s what refiners want."