From Environmental Capital:
Benchmark West Texas Intermediate crude prices in New York fell under $40 a barrel in Friday trading, continuing a nasty week for oil. But are WTI prices really the best benchmark these days?
Once again, the oil market is out of whack. WTI generally trades at a premium to Brent crude, one of the big international benchmark grades. WTI’s generally pricier to reflect longer shipping distances from the Middle East to the U.S. rather than Europe; the quality of the two grades is pretty similar.
Not now, though. February WTI crude contracts are trading at a $3 discount to Brent. While that’s not a record spread — it reached $7 in 2007 — it does indicate that something funny is going on in the oil market. ...MORE