Oil Prices Squeeze U.S. Imports as U.S. and North Sea Crude Benchmarks Move in Opposite Directions

Strategic Insights -

U.S. and North Sea crude oil prices took a divergent path on Tuesday, as prices for West Texas Intermediate (WTI) crude oil futures fell 1.8% to $17.45 per barrel, while October North Sea Brent futures rose 2% to $16.24 per barrel. This price disparity has led to a sharp narrowing of the WTI-Brent spread, which now stands at $1.21 per barrel, below the break-even level of $1.30 per barrel for U.S. imports of crudes tied to Brent prices. Meanwhile, oil workers in Nigeria have voted to continue their nine-week-old strike, seeking to force the military government to restore democracy.

Key Takeaways:

  • The WTI-Brent spread narrowed to $1.21 per barrel, below the break-even level of $1.30 per barrel for U.S. imports of crudes tied to Brent prices.
  • October North Sea Brent futures rose 2% to $16.24 per barrel, while West Texas Intermediate (WTI) crude oil futures for October delivery fell 1.8% to $17.45 per barrel.
  • Leading buyers of U.S. crudes raised posted prices by 50 cents per barrel, restoring WTI to $16 per barrel.
  • Oil workers in Nigeria have voted to continue their nine-week-old strike, seeking to force the military government to restore democracy.
  • The strike has halted work in many government ministries, as personnel are uncertain about their status.
  • Unleaded regular gasoline futures for September delivery declined 0.44% to 51.10 cents per gallon.
  • September No. 2 heating oil futures fell 0.29% to 48.55 cents per gallon.
  • Oil companies raised wholesale prices for unleaded regular by an average of 0.39% to 59.54 cents per gallon.
  • Wholesale No. 2 prices increased by 0.64% to 53.49 cents per gallon.
  • October natural gas futures dropped 6% to $1.601 per million British thermal units (MMBtu).

Statistics:

  • WTI-Brent spread: $1.21 per barrel
  • October North Sea Brent futures: $16.24 per barrel
  • West Texas Intermediate (WTI) crude oil futures: $17.45 per barrel
  • Unleaded regular gasoline futures: 51.10 cents per gallon
  • September No. 2 heating oil futures: 48.55 cents per gallon
  • Oil company wholesale price increase for unleaded regular: 0.39%
  • Oil company wholesale price increase for No. 2: 0.64%
  • October natural gas futures: $1.601 per MMBtu
  • Tropical storm in the Gulf of Mexico: no apparent threat to U.S. oil and gas platforms

Sources:

  • The Oil Daily, in cooperation with Computer Petroleum Corp.
  • New York Mercantile Exchange (NYMEX)
  • London's International Petroleum Exchange (IPE)
  • Various oil industry sources.