WTI v Brent Spread Growing Quickly

[James Regan + 1,776]

Why is the spread between WTI and Brent benchmarks growing at alarming rates touching at a +/- 31% differential - Whats the long term picture here and what mitigation measures are possible?

WTI struggling to stay above the Teens.

What tools are left in the bag? 

Edited April 15, 2020 by James Regan

[0R0 + 6,251]

Europe opening up already, 2 weeks ahead. Production cut agreement on Brent standard oils from Russia and Gulf 

Not in the US. Demand still down for 2 weeks to go it seems, and production slowing but not down. So there is a bigger spread. But this is really big, Perhaps someone was short brent long WTIC and just blew up. 

[BLA + 1,666]

12 hours ago, James Regan said:

Why is the spread between WTI and Brent benchmarks growing at alarming rates touching at a +/- 31% differential - Whats the long term picture here and what mitigation measures are possible?

WTI struggling to stay above the Teens.

What tools are left in the bag? 

Brent is the benchmark used by OPEC for Asian and European sales..

OPEC and specifically Saudis have major transport/shipping advantage. Much shorter distance to buyers plus KSA has cornered the market on tankers. Approx 45 of own tankers plus leased 32 more after Russia refused to cut.

Then apply the fact that tanker lease rates have gone up 600% recently and you have your answer. 

Couple of other factors.  Less  U.S. spare storage capacity filling up faster.  WTI dropping faster as a result.

Edited April 15, 2020 by BLA