WTI oil trading at $87, Brent price spread nears $13

9 February 2011 9 February 2011

BonTrade

WTI oil futures open Wednesday’s trading session firm over $87 a barrel as the price spread between US Light oil and Brent contracts continues to remain at record highs, the question remains if WTI is underpriced, or Brent overpriced.

Latest WTI Oil Price

US Light crude oil futures for March 2011 delivery was trading as $87.39 a barrel, 08.15 GMT this morning on the NYMEX.

WTI to ICE Brent Spread at Record Highs

ICE Brent rose 60 cents to $100.52 a barrel at 07.10 GMT this morning, with US Light crude oil futures firm over $87 a barrel, the spread between the two benchmarks widened to nearly $13 a barrel.

“Constraints in North Sea supplies will continue to cause the spread between the two benchmarks to be quite wide.” said Ben Westmore, analyst at National Australia Bank, Melbourne.

North Sea Forties crude oil supplies are slightly tighter for March. So far, around 793,000 barrels per day are seen for March loading, down from around 850,000 bpd scheduled for February.

With those figures in mind, together with the ongoing protests in Egygt, it would be logical to assume that Brent oil prices are trading with a “priced in” fear factor of under supply in the near term, while in the US, WTI oil inventories are expected to remain well stocked.

However, US crude oil stocks unexpectedly fell 558,000 barrels last week on sharply lower imports, the US API (American Petroleum Institute) reported on Tuesday.