REUTERS
Oil is so plentiful and cheap in the U.S. that at least one buyer says it would need to be paid to take a certain type of low-quality crude, according to Bloomberg.
Flint Hills Resources LLC said it would pay -$0.50 a barrel Friday for North Dakota Sour, a high-sulfur grade of crude, Bloomberg reported referring to a list price posted on the company's website.
That's down from $13.50 a barrel a year ago and $47.60 in January 2014.
"Telling producers that they have to pay you to take away their oil certainly gives the producers a whole bunch of incentive to shut in their wells," said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Flint Hills spokesman Jake Reint didn't respond to comment on the bulletin, Bloomberg said. The prices posted by Flint Hills Resources and rivals such as Plains All American Pipeline LP are used as benchmarks, setting reference prices for dozens of different crudes produced in the U.S.
Read alsoOPEC's oil basket price drops to $25 a barrelDifferent grades of oil are priced based on their quality and transport costs to refineries. High-sulfur crudes are generally priced lower because they can only be processed at plants that have specific equipment to remove sulfur. Producers and refiners often mix grades to achieve specific blends, and prices for each component can rise or fall to reflect current economics, according to the report.