Why is Brent so much higher than WTI?

[dan_s]

Brent crude futures closed over $110/bbl on Friday, July 29. That is more than $11/bbl higher than WTI. Over the last few years Brent has been trading about $3/bbl higher than WTI.

Trading Economics:
> Brent ended the week higher after another period of heightened market volatility as traders weighed signs of tightening supplies in Europe against worries over an economic slowdown.
> Shell CEO Ben van Beurden told Bloomberg TV on Thursday that there is more upside than downside for oil prices as “demand hasn’t fully recovered yet and supply is definitely tight.” TotalEnergies CEO Patrick Pouyanne shared the same view, saying oil production could not keep up with recovering demand.
> The OPEC+ is scheduled to meet on August 3 where the US is hoping for an announcement of additional supply, although analysts warned that member countries are already struggling to meet production quotas due to underinvestment in oil fields.
> Meanwhile, the US economy shrank for a second straight quarter, fueling recession fears as the country grapples with soaring inflation and rising interest rates.
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> Since mid-July the U.S. dollar is down about 2.5% from the high (108.54 to 105.83) which explains about $2/bbl of the rise in WTI.

MY TAKE on why Brent has spike higher, is that Refiners in Europe are increasing the bid for physical oil deliveries (the front month Brent contract) so more oil tankers will head to Europe's ports. EIA has been reporting a steady and significant increase in the export of U.S. crude oil for three weeks in a row; from 2,612,000 bpd the week ending July 1 to 4,548,000 bpd for the week ending July 22. < That is the highest weekly average of U.S. oil exports EVER. So, I could argue that we are draining the U.S. SPR to bail out Europe from their stupid energy policies of over-dependence on Russia.

The OPEC+ meeting on Wednesday is meaningless. Without Russia, the cartel is tapped out and has no chance of being able to meet the group's combined quota, so raising the number on paper is just more political BS in a world full of BS.

Last but not least: If U.S. oil exports stay over 4 million bpd, there is not much chance of our petroleum inventories going up.