MARKET WATCH: WTI falls, Brent rises as differential widens

The differential between West Texas Intermediate crude and Brent widened to $14/bbl “as each benchmark diverged for geopolitical and fundamental reasons,” according to analysts at Barclays Capital Inc.

“WTI prices remained weak on rising stock levels, planned and unplanned refinery maintenance, strong import levels, and rising oil production,” said Barclays analyst Michael Cohen. “The [US Energy Information Administration’s] new drilling and productivity report noted that Bakken output should breach 1 million b/d in December, while Eagle Ford production should reach almost 1.3 million b/d,” he said.

“Production growth from just the Permian, Eagle Ford, and the Bakken totaled 750,000 b/d in November. Amid turnarounds, utilization rates have rebounded by only about half of the amount that they had fallen since early September. Crude stock levels remain very healthy in all regions, adding to downward price pressure. At the same time, crack spreads are strengthening, which should encourage inventory drawdown and higher utilization until the next turnaround period, which should start in February,” Cohen said.

Meanwhile, Cohen noted, “On the other side of the Atlantic, the Brent futures contract strengthened by $3 to $108/bbl on colder weather in Europe and unrest in Iraq and Libya. It also gained as prospects of a deal with Iran dimmed after the latest round of negotiations in Geneva.”

Energy prices

The New York Mercantile Exchange December crude contract lost 12¢ on Nov. 14 to settle at $93.76/bbl. The January 2014 contract was down 8¢ to $94.41/bbl.

Heating oil for December delivery edged up a rounded 3.3¢, settling at $2.93/gal on NYMEX. Reformulated gasoline stock for oxygenate blending for December delivery gained 5.57¢ to a rounded $2.68/gal.

The December natural gas contract on NYMEX added 3.9¢ to settle at a rounded $3.61/MMbtu. On the US spot market, the gas price at Henry Hub, La., was a rounded $3.53/MMbtu, a 14¢ decline.

In London, the December ICE contract for Brent crude oil increased $1.42, settling at $108.54/bbl. The January 2014 contract rose $1.39 to $108.28/bbl. The December contract for ICE gas oil climbed $7.50 to $908.75/tonne.

The Organization of Petroleum Exporting Countries reported its basket of 12 benchmark crudes was $104.67/bbl on Nov. 14, tallying $1.15.

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