Crude - WTI vs Brent

Discussion in 'Commodity Futures' started by Chriz, Jul 27, 2006.

  1. Chriz


    Usualy WTI is trading higher than Brent due to the higher quality of WTI. Looking at the september contract WTI is trading lower than Brent. Is there any fundamental reason behind this? Are the markets anticipating a temp bottleneck for Brent supply?
  2. contango


    In the past this used to be called a Brent squeeze i.e. due to the limited number of Brent cargoes the physical players would try to take delivery of them all and then the last player to get 'clocked' for physical delivery would have to purchase at whatever the price. However, Platts revised the Brent market pricing index and Brent is actually now made up of Brent, Forties and Oseberg i.e. BFO. The BFO (Brent) price is traded on the ICE and NYMEX and I have no idea why in this case it's higher than WTI. Perhaps Statoil is having problems with Oseberg supplies....?
  3. Aaron


    I think it's because of the pipeline problems and Force Majeur in Nigeria. But it is surprising to see... Bonny Light from Nigeria is priced off of Brent, not the other way around. Perhaps, in this time of Bonny Light supply disruption, Brent makes a better or more convenient substitute than WTI?

    Aaron Schindler
    Schindler Trading
  4. Chriz


    Whatever it is it must be a temporarily problem. Looking at the Oct futures everything is as it should be ie. WTI trading higher than Brent.
  5. I think is the war premium. Last time it happened was in Feb when Iran enriches uranium. The international daily wrote about it. You should go check it out.