September 9, 2019 BARRON’S M11
Oil Benchmark Prices Narrow
U.S. BENCHMARK OIL HAS OUTPERFORMED THE GLOBAL BENCHMARK THIS YEAR,
leading prices in recent weeks to the narrowest spread in more than a year.
Analysts say the move isn’t about the trade war.
of $5.02. On the first trading day of this year, that spread was closer to $7.
ity Risk Advisory group.
A narrow spread indicates a tighter balance of supply and demand.
Growth in pipeline capacity contributed to the narrower spread, allowing
pus Christi, Texas, where it gets a better price and makes its way to export
mation Administration. That included a conversion of the Seminole-Red this
year into a 200,000-barrel-per-day crude pipeline.
but not Brent, and helped contribute to a wider
WTI got a lift, leading to a narrower spread.
The U.S.-China trade war is not a factor in the
spread’s compression. It actually contributes to a wider WTI-Brent spread,
ports by China, which would lead to a wider spread.
Producers have reduced output since the start of the year in an effort to
balance supply and demand. The Joint Ministerial Monitoring Committee,
put-cut deal, plans to meet on Sept. 12.
lion barrels per day in 2020 to eliminate the supply overhang, Babin says.
and anything less will be bearish” for prices, she says.
Opportune’s Dusek says that he doesn’t expect major news out of OPEC.
foreseeable future, they are running out of options,” he says. Dusek expects
rise to a range of $65 to $70 in the short-term, but prices are then likely to
out at about $20.
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