WTI - Brent Spreads

 The spreads have been widening again, as Brent contniues to trade on premium as Iran crisis refuses to settle down . The Spread might hit the low of 19 and then 23 if the volumes continues to shift from WTI to Brent 

Brent WTI Widening

 The Standard & Poor’s GSCI Commodity Index will raise the weighting of Brent crude in 2012 as it reduces that of West Texas Intermediate. The index weight of Brent crude traded on the ICE Futures Europe exchange will increase to 17.35 percent from 15.93 percent as the share of WTI traded on the New York Mercantile Exchange decreases to 30.25 percent from 32.59 percent, according to a company statement dated yesterday….

Dow Jones-UBS Commodity Index announced Oct. 11 it will include Brent for the first time in January, with a weighting of 5.31 percent, and cut its WTI allocation to 9.69 percent from 14.71 percent.

Moreover, tensions in Hormuz strait,Nigeria and Kazakhstan will keep an upward pressure on Brent, thus widening WTI-Brent Spreads

Brent WTI Spreads

in my earlir post i spoke about that triangle pattern being formed and my hunch for spreads moving upwards. As one can see that BW has finally broken the trend and its poised upward. Though it fell before rising upwards but it was only due to the expiring Brent that month

Brent WTI spreads

The Brent WTI spreads which widened to the historic highs of $ 26 per barrel seems to making way back. For past one month its making a higher low pattern which suggests that the short term bottom has been made and its on its recovery path. the triangle pattern which is being formed can lead to a break out on one side, the probability is more on the higher side for this spread.so in next few months we can see considerable upside in this spread

WTI-Brent Spread Widens.

WTI brent spreads has again widened to record levels. The Brent-WTI price differential held above $22 per barrel on Friday after a dismal non-farm payrolls number and neared its record high of $23.34 set on June 15.

While both benchmarks have historically traded within dollars of each other, the price differential is “here to stay”. Data shows that stocks at Cushing remain 37% above their 5-year average at 37 million barrels. this oil glut has created a pressure on WTI which looks much weaker compared to Brent.
Tension in Libya does not seem to end anytime soon.with ramadan approaching Nato will have to stop the attack on Gaddafi forces, which elonagates the civil war for one more month. Nato also attacked Libya's Oil installation to starve gaddafis without oil. All these factors are creating upward pressure on Brent.

At the same time, rising hostilities between oil producer’s cartel OPEC and IEA, the west’s oil watchdog, have made the market nervous

these factors will create will not let WTI Brent spreads to recover anytime soon