Analysts believe the Brent-WTI spread will revert back to levels closer to $20/bbl ($3.50/ MMBtu) as European demand improves. Trie spread was $22/bbl ($3.80/MMBtu) in February. See Figure 1. "We think [the] spread [is] significantly tighter than fundamentals warrant, [and] would go long at $4/bbl [the current spread]," analysts at Tudor Pickering Holt Energy told clients on July 8. They point to a shortage of pipeline capacity in the U.S. Gulf Coast for moving Midcontinent oil south to Gulf Coast refineries where WTI competes head to head with Brent; ample inventory at Cushing, Okla., the delivery point for the NYMEX market; and strong demand for Brent crude by Gulf Coast refiners as signs that the recent price convergence will not last.
展开▼
