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One up side of oil industry infrastructure bottlenecks for refiners is that stranded domestic West Texas Intermediate sells at a steep discount to globally traded Brent crude. Even when pipelines catch up, home-produced oil may still be cheaper.
One up side of oil industry infrastructure bottlenecks for refiners is that stranded domestic West Texas Intermediate sells at a steep discount to globally traded Brent crude. Even when pipelines catch up, home-produced oil may still be cheaper.
(TODD KOROL/REUTERS)

Oil-reserve dump risks sparking a rush to the exits

Global oil markets having been distorted for a long time. The U.S. government’s decision to release crude supply from the Strategic Petroleum Reserve raises the spectre a sharp correction in the commodity price.

The U.S. Department of Energy announced that it would sell up to five million barrels of reserves, “to test the capabilities of the nation's emergency stockpile in a rapidly changing oil market.” This is the first sale since 1990 and surprised markets – the WTI crude price fell by more than 2.5 per cent.