Sign in Subscribe
Gas industry

WTI Crude Oil Futures Rise, But Traders Cite Concerns Over Valuation and Spreads

Strategic Insights

— 2 min read

A surge in West Texas Intermediate (WTI) crude oil futures for June delivery has left traders questioning whether the U.S. benchmark is overvalued in relation to North Sea oil, domestic gasoline, and forward WTI contracts. The June WTI futures contract rose 46 cents to $18.45 per barrel on the New York Mercantile Exchange, widening the gap with June North Sea Brent futures and creating concerns about future price movements.

Key Takeaways:

  • The WTI-Brent spread widened to an unusually large $2.11 per barrel, with June WTI rising 46 cents to $18.45 per barrel on the New York Mercantile Exchange, while June North Sea Brent futures climbed only 25 cents to $16.34 per barrel.
  • The June-July WTI spread opened up a 55-cent gap and a 83-cent gap over August WTI, with doubts emerging that July WTI will move up to the June price level after the expiration of the June contract.
  • The gap between Brent futures and physical Dated Brent widened to 29 cents per barrel, with physical Brent prices coming under further pressure due to two unsold cargoes.
  • The 3-2-1 crack spread, a key barometer of refining profitability, dropped to $2.83 per barrel, compared with a normal $4.
  • June unleaded regular gasoline for delivery to New York Harbor rose 0.76 to 52.08 cents per gallon, but lost further ground to WTI.
  • Wholesale unleaded regular gasoline was boosted an average of 0.90 to 55.20 cents per gallon, with premium rising 0.89 to 63.95 cents per gallon.

Statistics:

  • WTI-Brent spread: $2.11 per barrel (-$1.21 to $1.11 lost since 2-weeks ago)
  • June-July WTI spread: 55 cents per barrel (-$5.76 to $0.55 gained)
  • June-August WTI spread: 83 cents per barrel (-$5.76 to $0.83 gained)
  • 3-2-1 crack spread: $2.83 per barrel (-$1.17 to $1.17 since 2-weeks ago)
  • June unleaded regular gasoline: 52.08 cents per gallon (-$0.33 since last week)
  • Wholesale unleaded regular gasoline: 55.20 cents per gallon (-$0.55 since last week)

Sources:

  • The New York Mercantile Exchange (for WTI futures prices)
  • London's International Petroleum Exchange (for North Sea Brent futures prices)
  • The Oil Daily (for nationwide rack price survey of unleaded regular gasoline and premium)
  • Computer Petroleum Corp. (for nationwide rack price survey of unleaded regular gasoline and premium)
  • The American Gas Association (for gas storage data)
  • Natural Gas Week (for gas storage data)

Read more