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Crude Oil Price Movements
Graph 1.4: Nymex WTI and ICE Brent forward curves, 2015
The
Brent–WTI (transatlantic) spread
narrowed sharply from $6.25/b in May to
$3.92/b in June amid stronger US refinery margins and higher refinery crude intake
compared with Europe or Asia. Persistent oversupply in the Atlantic Basin, coupled
with recent worries of the effect of the crisis in Greece on demand in Europe pressured
the North Sea Brent market relative to WTI. The narrowing Brent–WTI spread reflected
opposing market dynamics on either side of the Atlantic. This smaller discount of WTI
to Brent is making foreign imports – which are commonly priced against Brent – much
more attractive.
Struggling to find buyers, unsold cargoes of West African crude began to stack up,
seeking a window of opportunity to return to the US market. Theoretically, the
narrowing spread has made it about $2/b cheaper to import West African crude than to
ship Bakken by rail from North Dakota.
Table 1.2: Nymex WTI and ICE Brent forward curves, US$/b
56
58
60
62
64
66
68
70
56
58
60
62
64
66
68
70
1FM 2FM 3FM 4FM 5FM 6FM 7FM 8FM 9FM 10FM 11FM 12FM
US$/b
US$/b
ICE Brent: 26 May 15
ICE Brent: 26 Jun 15
Nymex WTI: 26 May 15
Nymex WTI: 26 Jun 15
FM = future month.
Nymex WTI
1st FM 2nd FM 3rd FM 6th FM 12th FM
26 May 15
58.03
58.48
58.75
59.73
61.05
26 Jun 15
59.63
59.97
60.24
61.25
62.15
ICE Brent
1st FM 2nd FM 3rd FM 6th FM 12th FM
26 May 15
63.72
64.31
64.77
65.92
67.66
26 Jun 15
63.26
63.84
64.41
65.98
67.77
FM= future month.
OPEC Monthly Oil Market Report – July 2015
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