Crude oil futures were firm at midday in Europe Tuesday, with the spread between front-month ICE Brent and NYMEX WTI at a three-month high. At 1100 GMT, November ICE Brent was up 61 cents/b at $77.98/b, while the October NYMEX WTI was up 26 cents/b at $67.80/b. The last time the Brent-WTI spread was higher was on June 11 at $10.35/b.
BNP Paribas analyst Harry Tchilinguirian said declines in imports of Iranian crude, already well documented in India and Japan in the lead-up to the re-imposition of US sanctions, has led countries to turn to Brent as an alternative.
“Meanwhile, compared to Brent, WTI has been struggling to follow in lockstep with Brent because of US domestic circumstances,” Tchilinguirian said. “Pipeline constraints have meant there is an inability to move the relative surplus availability of crude in the Permian basin to the gulf coast for exports overseas.” Looking ahead, the weekly American Petroleum Institute inventory report due later Tuesday could also have a “price-supportive effect”, analysts at Commerzbank said in a note.
“This is because another more pronounced inventory reduction (for seasonal reasons) is expected, which the market could use in its current ‘search for reasons’ to test the $80/b mark,” they said. According to a survey conducted by S&P Global Platts Monday, analysts expected US crude stocks to have declined by 2.7 million barrels in the week ended Friday, September 7.The US Dollar Index was up 0.08 at 95.24. S&P Platts
