Move adds transparency to crude trading for the US’s second largest producing region
Houston, 26 October 2022
Global energy and commodities price reporting agency Argus has broadened its coverage of one of the largest crude oil markets in the USA, adding critical price points to the complex market for Bakken crude. Produced in North Dakota and Montana, Bakken production of 1.2mn b/d is third only to the Permian and Eagle Ford basins in Texas and New Mexico. The grade is actively traded in the Midcontinent, Rockies and the Gulf coast, and sold to domestic and international refiners.
Argus’ new daily assessments give the price of Bakken at the North Dakota injection points to the Dakota Access Pipeline (DAPL) and at the Patoka, Illinois pipeline hub; and for Light Sweet crude at the Guernsey blending and storage hub. Argus also prices Bakken at the mid-continent logistics hubs of Cushing and Clearbrook and at the Gulf Coast trading hub at Nederland/Beaumont, Texas, where cargoes can be loaded for export.
Since DAPL was opened in 2017, about 80% of Bakken crude moves to market by pipeline, making the injection points and logistical hubs particularly valuable locations for price discovery. Post pandemic, Bakken crude production has risen by a third from 900,000 b/d to 1.2mn b/d and Illinois regulators recently approved an expansion of DAPL capacity from 750,000b/d currently to 1mn b/d.
“The introduction of independent, third-party price assessments will help market participants to transact, invest and manage risk with confidence both domestically and internationally,” said Adrian Binks, chairman and chief executive of Argus Media. “Argus now covers Bakken from the wellhead to the water at the request of market participants, capturing liquidity from both brokered and bilateral trades.”
Argus-settled futures contracts for US crude grades trading on major exchanges underpin almost 500,000 lots of open interest, representing 500mn bl of oil, or five times current daily global consumption. Traded volumes of WTI Midland and WTI Houston swaps now amount to the third biggest derivatives market in the world, after ICE Brent and Nymex WTI futures.
The new Bakken prices are published daily as part of the Argus Americas Crude Service.