Brent and WTI Crude Oil Spread Narrows
Crude oil prices rally
This series analyzes crude oil prices and fundamentals. For an in-depth fundamental look at oil and gas and related companies, sectors, and drivers, please refer to our Energy and Power page.
October WTI (West Texas Intermediate) crude oil futures rose by 1.34% and settled at $44.59 per barrel on September 15, 2015. The consensus of the falling US crude oil inventory supported crude oil prices. The US benchmark following ETFs like the United States Oil Fund LP (USO) and the ProShares Ultra DJ-UBS Crude Oil (UCO) followed the price trajectory of crude oil prices in Tuesday’s trade. These ETFs rose by 1.25% and 2.59%, respectively, on September 15, 2015.
US crude oil inventory data
On September 15, 2015, the API (American Petroleum Institute) published its weekly US crude oil inventory report. The data showed that crude oil stocks fell by 3.1 MMbbls (million barrels) for the week ending September 11, 2015. The EIA (U.S. Energy Information Administration) will release its crucial weekly crude oil inventory report on September 15, 2015. The consensus of the falling crude oil inventory supported crude oil prices in yesterday’s trade.
Demand cues
Crude oil refineries’ seasonal maintenance is starting and the summer season is nearing an end. The average demand for crude could fall due to refinery maintenance. The consensus of slowing demand could negatively influence crude oil prices. However, gasoline prices rose more than 2% in yesterday’s trade. This sent cues of a possible rise in demand.
US production
The consensus of slowing crude oil production from the EIA, IEA (International Energy Agency), and OPEC (Organizational of the Petroleum Exporting Countries) also supported crude oil prices. These energy agencies expect that the US crude oil production could slow down due to lower crude oil prices and US shale operators’ high production cost. The US government’s possible plans to maintain the crude oil export ban also suggest that the crude oil production slowdown in the US isn’t avoidable. Removing the export ban could mean that US producers like ExxonMobil (XOM), Pioneer Natural Resources (PXD), and Nobel (NBL) enjoy crude oil prices equivalent to a global benchmark like Brent. However, the Brent and US WTI crude oil spread is falling.
Volatility analysis
October crude oil prices fell for the fifth time in the last ten trading sessions. Prices fell by 1.86% more on the average down days than on the average up days, over the same period. Crude oil fared well among all of the other commodities in yesterday’s trade. Prices fell more than 15% YTD (year-to-date) due to oversupply concerns.
Continue to Next Part
Browse this series on Market Realist: