Tuesday, December 23, 2008

Something Interesting In The Oil Market

I was just having a look at the oil market and came across something interesting.

Nymex Crude Future 38.74
Dated Brent Spot 37.43
WTI Cushing Spot 30.52
Now I have been following this market intermittently for the last few months and as I recall there was at most a few dollars difference between the different prices. And yet here we are with WTI priced way below the other two listings. There is something strange going on. Any oil guys care to explain? Or is the new bottom for oil going to be around $30 a bbl?

Maybe it will resolve itself by the end of the day. Or not.

Cross Posted at Classical Values

1 comment:

Randall said...

It is obviously temporary, The following story characterizes the inversion as due to full storage at Cushing, Oklahoma, the WTI transfer and storage point.

Brent crude has advanced to now trade $3 higher than West Texas Intermediate crude. This is unusual in that WTI prices are usually higher than those for Brent.

Brent crude was 48 cents higher to $68.58 per barrel late in the day on the Intercontinental Exchange in London, while early afternoon found WTI 30 cents lower to $65.59 per barrel on the New York Mercantile Exchange.

Helping to keep WTI prices lower than prices for Brent were reports that the delivery point for Nymex WTI contracts in Cushing, Oklahoma is nearly at its full storage capacity. Although this does not mean that this is true of all storage facilities in the US, having excess oil in storage at the main holding point has kept prices lower than they might otherwise be.