Brent WTI gap still wide on Cushing supply build

29 May 2007 17:18  [Source: ICIS news]

LONDON (ICIS news)--July ICE Futures Brent continued to trade well over $5.00/bbl above July NYMEX WTI on Tuesday on the back of builds in crude stocks at the WTI Cushing terminal, in Oklahoma.

 

Front month Brent’s premium over WTI widened to record levels during last week, from just under $4.00/bbl on Monday to around $6.40/bbl on Friday morning.

 

At 15.50 GMT July Brent futures were trading at $68.60/bbl, down $1.11/bbl from Monday’s close while July WTI was at $63.29, down $1.91/bbl from Friday’s close.

 

Brent spiked last Thursday amid Iranian geopolitical tensions and Nigerian supply concerns to reach a 9-month high of $71.80/bbl, before settling at $70.60/bbl.

 

By contrast, July WTI fell on Thursday to close at $64.18/bbl, down $1.59/bbl amid aggressive selling.

 

Last week’s reports of a fluid catalytic cracker shutdown at the 170,000 bbl/day Valero McKee refinery in Texas, which has a substantial demand for WTI, served to magnify the structural problem of oversupply at Cushing.

 

Further downside was generated by news of a power failure and shutdown at the 247,000 bbl/day ConocoPhillips Belle Chasse refinery in Louisiana.

 

Data from the US Department of Energy released last Wednesday revealed that stocks at the Cushing terminal rose by around 900,000 bbl to 27.4m bbl over the past week.

 

This figure was expected to grow with the added refinery problems.

 

(James Dennis contributed to this article)

By: Giovanni Coiro
+44 20 8652 3214

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