The Permian Basin is now the world’s swing oil producer, with a lag. WTI is $63/bbl, down from its January high near $67/bbl. Brent is selling near $67/bbl, with a premium $3.75/bbl over WTI. Its January high was over $71/bbl. The Brent premium blew out to over $7/bbl in December and has contracted since. The 42 percent run-up in WTI from $47/bbl in August to its January peak was the result of OPEC’s 1.8 million barrels daily (MMbopd) production cut implemented Jan. 1, 2017 and an unusual number of one off events including pipeline disruptions, hurricanes and a brutal January cold snap as wells as increased geopolitical anxiety. The OPEC cut targeted a reduction in surplus OECD inventories to the 5-year average, which it calculated was a record high of 380 million barrels larger in 1Q16. The OECD accounts for 48 percent of total world oil demand. OPEC targeted […]