Lasting Brent-WTI spread would end an eternal truth

10/21/2011
Eternal truths about the oil market often die young. One of the market’s currently eternal truths holds that a wide spread between the prices of Brent and West Texas Intermediate crude oil won’t last. WTI this year has sold at an unusually persistent discount to Brent of an unusually large $20-25/bbl. For refiners in the US Midcontinent, the spread represents found money. They sell products priced against markers used by everyone else but now can run comparatively cheap feedstock. It’s a big advantage. But when the Brent-WTI spread disappears, the Midcontinent refining advantage will vanish, too. Most observers say that will happen when pipelines open to carry more crude to the Gulf Coast...
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