WTI-Brent spread remains huge

[TomTom + 183]

Guys, is it me or does the WTI-Brent spread remain exceptionally big: https://oilprice.com/oil-price-charts  

Would've thought that a couple of months of crude exports would narrow the gap a bit..

[Stephen + 67]

It seems that price difference between WTI and Brent will hold at $6 per barrel in early 2018 before dropping to $4 per barrel.

 

 

[Meanwhile + 49]

I read some reports about it and they say that WTI/Brent Spread is not sustainable. CVR Refining is the first victim of it

[JohnAtronis + 78]

I wonder would it cause US oil exports to rise further

[Meanwhile + 49]

Yes, it surely could increase US crude oil exports. On a year-over-year basis, US crude oil exports have risen more than threefold. The expansion in the Brent-WTI could be one of the factors that helped US crude oil exports rise. I believe that the reduction in global oil supplies after OPEC implemented the production cut deal since January 2017 helped the spread to expand.

 On the other hand, any fall in the Brent-WTI spread could diminish the cost advantage of US crude oil exporters to foreign markets, and cause a drop in exports.

 

[Selva + 252]

The WTI - Brent spread will surely have the impact on U.S. crude oil export keeping it high. We had a similar situation at the beginning of October when the widening spread has helped increase crude exports nearly 2 million b/d. I think that as long as the WTI -Brent difference stay above $4, the exporters will be able to cover shipping costs which will enable U.S. to keep export high for months 

 

[Seleskya + 50]

Yeah, so spread fell below the $6 mark for the first time since 25 October. There are two things that might be causing Brent to underperform WTI. 

1. falling US inventories spread

2. the upcoming 30 November OPEC meeting

Really need to watch the spread heading into 30 November. Russia and OPEC have apparently agreed to a framework for extending the production cuts through the end of next year, but if they don't (meaning, they don't meet market expectations, which are now expecting a new deal) Brent could underperform even more and give us a bigger spread. 

 

[TomTom + 183]

While I try to be optimistic, the last OPEC extension didn't really boost oil prices either... Check this piece out: https://oilprice.com/Energy/Oil-Prices/Citi-Prepare-For-An-OPEC-Disappointment.html

Therefore I think the WTI-Brent spread could actually shrink after the OPEC meeting..

[LAOIL + 33]

yeah, IMHO the spread isn't sustainable at all. I think we're in for disappointment on the 30th. But that quote about US shale not being such a 'big bad wolf' does resonate. It's not just the OPEC decision on the 30th alone that could kill the spread. 

[Seleskya + 50]

Jim O'Neil is now saying we could see a 25% spike in oil pries, with Brent possibly surging to $80/barrel next year because of geopolitical risk and a market "waking up to global economic growth". I'm not buying it. I'll defer to @Kate Turlington. What's happening in Saudi Arabia isn't really an "incident". The "incident" already happened when MBS took power--now that's all being played out. If he fails in his Vision 2030 plan, then, yes, be ready for more palace intrigue that could be give us that high-level volatility we're looking for as traders, but we're not there yet, and probably won't be in the New Year. $80 Brent--no way. Shale would have to disappear for that. I'll guess we'll see a lackluster $52 or so per barrel mid-2018. 

Edited November 28, 2017 by Seleskya

[Seleskya + 50]

This is the link to Jim O'Neil's argument that only the blindest bull will buy...https://www.cnbc.com/2017/11/27/brent-crude-oil-may-hit-80-in-the-next-year-says-jim-oneill.html

[Petar + 76]

Today the oil price increase in 2018  is mentioned again.  S & P Global ratings agency believes oil prices will grow 10 per cent to $ 55 per barrel for next year.  And of course, they are awaiting the upshot of the OPEC meeting, although it is certain that the trend of reducing oil production will remain. If this continues, only the sky will be the limit .... black gold

[Seleskya + 50]

Love the Bloomberg headline yesterday: "Oil sleeps through Saudi-Iran spat and imminent OPEC meeting". But it's pretty spot on. I think we're all a bit bored with OPEC now. And if the Saudi-Qatar debacle failed to move us, the latest spat between the Saudis and Iran isn't going to do it, either. The market has become comfortably numb. I love to watch the oil and gas market, but I never trade it these days. 

https://www.bloomberg.com/news/articles/2017-11-28/oil-snoozes-through-saudi-iran-spat-and-imminent-opec-meeting

[Seleskya + 50]

Petar, $55 per barrel for next year is easier to believe but let's see if the market is still sleeping after the 30th ...