Oil spot price: Shrinkage in Brent vs WTI spread

on Dec 3, 2013
Updated: Oct 21, 2019
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_iNVEZZ.com: Tuesday, December 3rd:_

**Crude oil**
Yesterday Brent crude initially fell to a low of 109.26 but then rebounded sharply to its highest point since the middle of September, at 112.31. The uptick was supported by strong economic data and the ongoing unrest in Libya.
US manufacturing activity expanded in November at its fastest rate in the past two and a half years. And Chinese manufacturing growth reached an 18-month high in November. The United States and the People’s Republic of China are the two biggest oil consumers in the world, in that order.

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David Hufton, managing director of London brokerage PVM Oil Associates, observes that “for the global economy as a whole, the consensus is that things are looking up and global manufacturing activity is expanding at its fastest pace since mid-2011”, and that “signs of economic expansion are good for oil demand”.

The spread between Brent and West Texas Intermediate today fell slightly to around $17 a barrel, following the news that the section of the TransCanada pipeline from Cushing, Oklahoma to Port Arthur, Texas, will start pumping on 3 January, with capacity of 700,000 barrels per day. Currently Brent and WTI are trading at 112.06 and 95.19 respectively.

Brent also lifted today on news that Russia is diverting two west-bound oil shipments of Urals crude for December loading to meet a belated commitment to Belarus.
Libya’s Deputy Oil Minister Omar Shakmak said in an interview yesterday that oil production has risen slightly in the past two weeks, albeit the 130,000 bpd was just a fraction of the 1.4 million bpd being exported five months ago, before the current militia and protest action got under way.

Oil ministers from Saudi Arabia and Algeria have suggested that the OPEC cartel, of which those countries are members, was unlikely at its meeting in Vienna tomorrow to change its production target from the current 30 million bpd at least for the first six months of next year.
Saudi Arabian Oil Minister Ali al-Naimi said earlier in the week that “the market is in the best situation it can be, demand is great, economic growth is improving”.
According to analysts, OPEC will be looking to reduce output at some point next year, with rapid growth in North American oil production threatening the cartel’s market share.

Iraqi Oil Minister Abdul Kareem Luaibi today said that the country had plans to increase its oil output by more than a million barrels per day, ramping up to more than 4 million bpd next year, the highest rate of production since the fall of Saddam Hussein in 2003.
**Natural gas**
Natural gas reached a fresh high today, at 4.001 – its highest level since 5 June – and thus extended gains from the 8 August low of 3.127.
Natural gas prices continue to rise with weather forecasts for the next fortnight picking continuing low temperatures over most of the eastern half of the United States.
Royal Dutch Shell is building the world’s biggest gas-haulage ship, using Floating Liquefied Natural Gas technology. Part of the enormous vessel is already on the water. At completion, the ship will be nearly half a kilometre long.
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