Brent Crude Oil selling at $10 premium to WTI

[dan_s]

I have never seen Brent sell at such a large premium to WTI. Here is what one of our members e-mailed to me.

"We have seen spikes in the price of Brent and/or LLS relative to WTI in the past (as high as +$6-$8).....just not ever this severe. If Europe is having a cold winter often North Sea crude stays in Europe to help with the heating oil demand. Compound that with the fear of something happening in the Middle East and North Sea crude is off to the races. What is going on in/around Cushing is being driven by a different set of dynamics. You have to remember that with so much Canadian crude coming into Cushing and into the Mid-West, places like Cushing, OK are becoming constrained. There is more in-bound pipe capacity into Cushing than out-bound pipe capacity. Cushing, OK is literally constrained. In times like this, coastal grades trade at a premium relative to land-locked grades."

Cushing, Oklahoma is the place where NYMEX crude oil contracts are settled.