Schork Was Right (and a little lucky)--"Brent-WTI Surges To 2-Month Highs"
From the Jan. 24 post "Schork: "Demise of Brent/WTI premium might be premature" (EPD; ENB)":
I've been prattling on about the imminent shrinkage of the spread for a
few weeks or so. It's come in a bit but Stephen Schork says "Whoa!".
And from ZeroHedge this morning:
Both the spring maintenance period in the US (creating a 'glut' of
WTI), Seaway pipeline, and tensions in the Middle East are exaggerating
the Brent-WTI spread which traded back to two-month highs. In the last
week or so the differential has surged from around $16 to over $22 as WTI fell and Brent prices surged.
There is a great degree of seasonality in this shift (and typically the
Spring maintenance period has ended within the next week) but Iranian
sanctions remain at the forefront (as does the belief that Germany's
growth will be the engine of European demand - especially if EUR drops).
This year was 'different' in so much as WTI outperformed for the first
few weeks - potentially on the back of the global rise in risk-assets
thanks to global central bank largesse. It appears the oil market is
hinting at some slowdown.
The Brent-WTI spread is highly seasonal (with Spring maintenance
creating a buildup pre-refinery)... and is close to its typical seasonal
peak..
but the divergence is dramatic (after a few weeks of Central bank largesse pumped assets up everywhere)...
Chart: Bloomberg