Bismarck, ND – North Dakota has been setting oil production records, but it is not helping the price.
Right now, North Dakota is producing more oil than the pipelines can handle. North Dakota oil that is marketed to the Midwest is sent to a distribution point in Clearbrook, MN. Canadian producers use that same distribution point. With pipelines already at capacity, maintenance at some refineries in the region has limited that capacity even more. So there is simply a huge supply of oil in the area right now.
Justin Kringstad with the state Pipeline Authority said this is only temporary. The maintenance projects are wrapping up and he believes production will slow in the winter months.
“As prices are forecasted to start strengthening Q2 into the summer months of 2019, we’ll likely start to see those production growth curve again,” Kringstad said.
Just back in September, North Dakota Sweet Crude was selling for almost $60 a barrel. Then, over the last couple months it took a steep drop. Today, North Dakota light sweet is selling for 19.25 a barrel.
For comparison, West Texas Intermediate has dropped too. But it is still selling for quite a bit more. Today it sits at $42 a barrel.