U.S. crude markets are evolving in ways thought impossible a decade ago and highly unlikely just a few years ago.

The use of hydraulic fracturing and horizontal drilling, which revolutionized the natural-gas sector by enabling commercial production of shale gas, is now making its mark on U.S. oil output.

Rising shale-oil production is offering U.S. Gulf Coast and Midcontinent refiners access to more domestic supplies of light, sweet crude. That output is displacing imports of light, sweet grades from across the Atlantic and depressing the price of domestic marker grades ...