Energy Commodities Price Watch: WTI Extends Premium to Brent

on Jul 22, 2013
Listen, Monday, July 22th: West Texas Intermediate (WTI) rose for a fourth day amid declining inventories in the US to surpass the Brent price for the first time since 2010. The European benchmark also gained ground, supported by positive global demand prospects following a pledge by the Group of 20. The natural gas price declined on expectations of lower-than-average temperatures in the US East and Midwest.

**WTI Price Surpasses Brent**
WTI futures for August delivery, which expire today, added 65 cents to $108.70 a barrel on the NYMEX before trading at $108.37 as of 13:19 BST. As Reuters reported, WTI futures surpassed Brent in the previous trading session, with increased pipeline capacity draining the glut of oil at the WTI delivery point of Cushing, Oklahoma.

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“The market leadership is back with WTI,” Olivier Jakob, analyst at Petromatrix, told Reuters. “We’re seeing that in volumes traded and open interest that is increasing in WTI.”
Bloomberg quoted Christopher Bellew, a senior broker at Jefferies Bache Ltd, as forecasting that the US benchmark would trade at prices similar to or above Brent crude over the long term. “Finally, infrastructure investment in the US pipeline system is paying dividends and the distortion of prices in the Midwest is correcting itself,” Bellew added.

**Brent Price Finds Support in Global Demand Outlook**
Brent futures for September delivery gained 59 cents to trade at $108.66 a barrel on the ICE Futures Europe exchange. As Reuters reported, a pledge by G20 nations, which account for 90 percent of the world economy, to put growth before austerity fuelled hopes of a recovery in the consumption of commodities.

Reuters quoted Carsten Fritsch, analyst at Commerzbank, as forecasting that the Brent price could find support from a stronger demand outlook and supply risks in the Middle East and Sudan.
As Bloomberg has reported, the Brent oil price has shed 2.6 percent this year with North Sea output stabilising after field maintenance.
**Natural Gas Futures Slide as Forecasts Signal Cool Weather**

Natural gas futures for August delivery declined for a second day, shedding as much as 3.22 percent on the NYMEX to trade at $3.67 per million British thermal units as of 09:50 EDT. Futures dropped 0.6 percent to $3.79 on July 19. Bloomberg quoted MDA Weather Services as forecasting cooler weather in the US
East and Midwest for July 24 through July 28, with parts of the region seeing below-normal readings.
!m[Natural Gas Price Retreats on Cooler Weather Outlook](/uploads/story/4216/thumbs/pic1_inline.jpg)
AccuWeather Inc has forecast that the high temperature in Washington on July 23 might be 86 degrees Fahrenheit (30 Celsius), two degrees below normal whereas Chicago temperatures might be five degrees lower than the usual reading at 79 degrees. “The return of more frequent showers and thunderstorms to the mid-Atlantic and Northeast will keep the intense heat at bay,” noted Kristina Pydynowski, senior meteorologist at AccuWeather.
Moderate temperatures in the US during the summer are seen as weighing on fuel demand from power plants with fewer people turning to air conditioners to keep cool.


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