Amidst the declining prices of the West Texas Intermediate or WTI, the price differential between it and Brent widened to $14/bbl, and according to some market observers this is happening due to the fact that WTI prices remained weak on rising stock levels, planned and unplanned refinery maintenance, strong import levels, and rising oil production.
People who have been keeping an eye on the global oil prices admit that as each benchmark diverged for geopolitical and fundamental reasons, the difference between the crude prices from the two i.e. WTI and Brent was expected. Additionally, there are reports of increased oil production in the U.S. by the oil companies.
The US Energy Information Administration has already brought a report wherein it claims that the new drilling and productivity report clearly shows that Bakken output should cross the limit of 1 million b/d in December. Similarly, Eagle Ford production is expected to reach 1.3 million b/d.
West Texas Intermediate Crude Declines the Most
There is no respite for WTI as it decline on sixth week which is the longest in 15 years. The decline is attributed to the fact that there has been an immense increase in the supplies amidst the news that the Federal Reserve will maintain economic stimulus. Earlier this week the potential chief of the Fed, Janet Yellen gave clear indications that she was in favor of stimulus.
Reportedly, there has been a gradual loss for futures over the week; however, last week it was just 0.5 percent in New York. It is one of the longest weekly losing streaks since December 1998. Thus, in the last fifteen years, the oil prices went up only to declining now to an extent amidst the reports that the U.S. crude inventories climbed to the highest level since June.
Increased Production and Stockpiling of Crude
In the last six months, there has been an increase in production that led to stockpiles to increase at the storage hub in Cushing, Oklahoma. The Energy Information Administration data show that the new drilling and productivity has gone up at the centers like Bakken and Eagle Ford.
The Energy Information Administration further reports that crude inventories surged 2.64 million barrels last week. On the other hand, the agency also declared that gasoline stockpiles fell by 838,000 barrels to 209.2 million which is the lowest level since November last year.
To contact the reporter of this story: Jonathan Millet at firstname.lastname@example.org