Some refineries are designed to distill sour crudes which cannot distill sweet and vice versa.
Light crudes also produce more gasoline than heavy crudes on a per barrel basis.
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The higher share of heavier crudes in U.S. feedstocks only exacerbates the refining constraints.
For now, China has to blend Venezuela's oil with lighter crudes or sell it unrefined.
The biggest opportunities can be found among producers of bottlenecked US and Canadian crudes.
The heavy dose of capital enabled Corpus Christi to process the thickest, cheapest crudes on the market.
As a result prices for sweet light crude tends to be higher than heavier or sour crudes.
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This means that the price the for sweet, light crudes is higher than other heavier or sour crudes.
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Whenever the price of light crudes spiked, we'd see a lot of different heavies come on the market.
The remaining refineries geared toward heavier sour crudes are already operating near capacity.
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It is no coincidence that the bench mark oils, like North Sea Brent or West Texas, are light sweet crudes.
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Further, world production of sweet light crudes has indeed peaked, which means the imbalance between production capacity and refining capacity will increase.
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There are those who have been arguing that the world production of sweet light crudes has either peaked is close to peaking.
Even sour and heavy crudes, which are cheaper, are still quite profitable.
Refineries designed to distill sour crudes cannot distill sweet and vice versa.
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Light crudes have low wax content, with lower density and API viscosity.
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Likewise the distinction between light (low wax content) and heavy crudes are important for similar reasons, most refineries cannot process both equally well.
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Heavy crudes (high wax content, high API viscosity, high density) cannot be refined efficiently by refineries geared to refine light crudes and vice versa.
Analysts at Goldman Sachs suspect that many refiners used their spring maintenance cycle to upgrade their equipment in order to handle heavier, dirtier crudes.
This makes it cheaper to pump, ship, and refine light crudes.
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There is absolutely no reason at all why that mixture should bear any relationship at all to the mix of crudes that the US itself produces.
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This price differential partly recognizes the heavier, harder-to-refine nature of the Canadian crudes, but mostly reflects the difficulty of transporting the Albertan crude to global markets.
Light, sweet crudes are cheaper to pump, transport, and distill and produce more gasoline per barrel than other types of crudes so it generally goes for more dollars per barrel than others.
And the same will be true for the US. There is some mixture of light and heavy, sweet and sour, crudes which is optimal to provide the refined products the US desires to use.
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This is set up to refine heavier (and sourer) crudes and it would make sense for plants that have had so much money spent on them to use the input they are designed for.
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Alex Beard, aged 43 (director oil commodity department), joined Glencore in May 1995 working in the oil commodity department as a marketer, responsible primarily for the CIS region and gaining expertise in high sulphur crudes.
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Suffice it to say, oil companies are in no danger of being over taxed and if they would invest in more refining capacity for heavy and sour crudes, the supply and demand for petroleum would stablize, at least over the next period.
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