Reasons for Oil prices fall according to Wall Street Journal report

This is part of a lengthy piece in Wall Street Journal  report why we have Oil glut and prices falling at the pump in United States, also world wide fall in price of Oil.

The U.S. Gulf Coast—home to the world's largest concentration of petroleum refineries—is suddenly awash in crude oil. Russell Gold has details on MoneyBeat. 

So much high-quality U.S. oil is flowing into the area that the price of crude there has dropped sharply in the past few weeks and is no longer in sync with global prices.

In fact, some experts believe a U.S. oil glut is coming. "We are moving toward a significant amount of domestic oversupply of light crude," says Ed Morse, head of commodities research at Citigroup.

Unthinkable five years ago, the abundance of petroleum reflects surging output from oil fields in West Texas and North Dakota, as well as new pipeline routes to move crude to the refining and petrochemical complexes that line the coasts of Texas and Louisiana.

And the glut on the Gulf Coast is likely to grow. In January, the southern leg of TransCanada Corp.'s Keystone pipeline is set to begin transporting 700,000 barrels a day of crude from the storage tanks of Cushing, Okla., to Port Arthur, Texas.

The ramifications could be far-reaching, including lower gasoline prices for American drivers, rising profits for refineries and growing political pressure on Congress to allow oil exports. But the glut could also hurt the very companies that helped create it: independent drillers, who have reversed years of declining U.S. energy production but face lower prices for their product.

Globally, the surge in supply and tumbling prices are attracting notice. On Monday, a delegate to the Organization of the Petroleum Exporting Countries said Saudi Arabia is selling oil to the U.S. for less than it would fetch in Asia. Nonetheless, the Saudis have continued to ship crude to refineries they own in Texas and Louisiana, according to U.S. import data, further driving down prices.

The strongest indication of a glut is the falling price of "Louisiana Light Sweet," a blend purchased by refiners along the Gulf Coast. Typically, a barrel of Louisiana Light Sweet costs a dollar or two more than a barrel of crude in Europe

Source: Wall Street Journal