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US Light WTI crude oil futures are marching toward $106 a barrel in trading on Friday and the spread between NYMEX and ICE Brent oil contracts is now at it’s lowest since wayback in 2010 with the rise of WTI seen by a dramatic tilt in the curve formed by futures prices.<\/p>\n
Latest WTI Oil Price<\/strong><\/p>\n US Light crude oil futures for August 2013 delivery was trading at $105.41 a barrel, 14:16 GMT on the NYMEX, earlier this morning the contract hit $105.83. The jump in WTI has also been accompanied by a dramatic tilt in the curve formed by futures prices.<\/p>\n The August delivered US crude contract now trades for $12 more than futures delivered in August 2014, a complete reversal from a year ago. This premium for near dated contracts, known as backwardation can encourage oil traders to draw down inventories because there is little incentive to store crude.<\/p>\n IEA Oil Demand Forecast<\/strong><\/p>\n US WTI oil futures fell on the NYMEX on Thursday followin the IEA\u2019s latest forecast that oil output from producers outside of OPEC would outpace the growth in global oil demand.<\/p>\n The IEA expects output from non-OPEC producers to rise by about 1.3 million barrels a day next year, an annual growth rate that has only been achieved once in the last 20 years. It estimated supply growth this year at 1.2 million barrels a day.<\/p>\n However, the EIA also pointed out that US crude stockpiles fell 9.9 million barrels for the week ended July 5, outstripping expectations by analysts polled by Platts for a drawdown of just 3.8 million barrels.<\/p>\n Eyes on Suez Canal<\/strong><\/p>\n Investors have been watching for any word about supply disruptions at the Egyptian controlled Suez Canal and the Suez Mediterranean pipeline to clues for the short term direction for oil prices.<\/p>\n Head of Suez Canal Authority General Muhab Mamesh has confirmed that navigation movement in the Canal is still normal commenting that there was full co-operation between the authority and Egyptian armed forces in the area “to secure and protect the Suez Canal 24 hours a day.”<\/p>\n WTI to Brent Spread<\/strong><\/p>\n Brent has traded at a substantial premium to WTI in the last two years because of transportation issues linked to the pricing and distribution hub for WTI in Cushing, Okla.<\/p>\n But the US EIA earlier this year estimated that new projects would provide 1.15 million barrels per day of additional pipeline capacity to delivery crude from Cushing to the Gulf Coast, with another 830,000 barrels per day planned to move crude directly from the Permian Basin to the Gulf, according to Capital Economics.<\/p>\n “This should reduce the excess inventories at Cushing, lower the cost of shipping WTI to where it is most in demand and allow it to compete on a more level playing field with Brent, all helping to collapse the WTI to Brent spread.” said Julian Jessop, head of commodities research at Capital Economics.<\/p>\n Most analyst’s now expect the spread between both contracts to disappear by the end of this year or maybe sooner still…<\/p>\n<\/p>\n