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Page added on January 17, 2014
OPEC View of Supply Glut Hits Brent-WTI Price Difference Narrows
The price difference between Brent crude and its U.S. counterpart has narrowed to the closest point since the end of December, as the North Sea benchmark continues to struggle to make gains this year.
Brent crude was up 30 cents, or 0.3%, on the first day of the March contract, at $106.02 a barrel on ICE Futures Europe. U.S. crude-oil futures were up 23 cents at $94.52 a barrel on the New York Mercantile Exchange.
The “spread”, or price difference between the two crudes, is at $11.39 Friday. It widened to $14.68 at the end of last week, but without many supporting factors to keep the Brent contract high, the two benchmarks have drifted closer together.
Fundamentally the market is well-supplied, said Commerzbank CBK.XE +0.74% in a note to clients.
“The focus on the oil market this year will once more be on supplies,” they say. “Continuing success with shale oil production in the U.S. will again keep prices in check. Within the last three years, U.S. crude output has risen by 50%.”
The ICE’s gasoil contract for February delivery was up $3.25 at $910.75 a metric ton, while Nymex gasoline for February delivery was down 127 points at $2.6078 a gallon.
4 Comments on "OPEC View of Supply Glut Hits Brent-WTI Price Difference Narrows"
rockman on Fri, 17th Jan 2014 1:34 pm
Nice to start the day off with a good laugh: “the North Sea benchmark continues to struggle to make gains this year. In the last 10 years Brent prices have increased about 300%. And now the concern is that Brent is “struggling” to increase prices. And folks become so obsessed with price they ignore costs: 10 years ago oil from the North Sea was costing the world $75 million/day. And though production has declined that same oil is costing the world $106 million/day. In essence North Sea producers are delivering the same amount of oil they were in 1976 while their income is higher than it was during its peak production of 2000. Forgive me if I don’t shed a tear for the “struggle” facing the Brent oil price.
And then there’s this: “Fundamentally the market is well-supplied”. Of course it is. The market has always been well supplied since the beginning of the oil age and always will be. Everyone that can afford the price of oil at the time will have all the supply available that they wish.
shortonoil on Fri, 17th Jan 2014 4:16 pm
“Fundamentally the market is well-supplied” !!!!!!!!!!!!!!!!! DAH…….
Of course it is you “bone headed numskull” at $100/b. Now let’s try OPEC’s old bench mark of $28 and see how it does? As the price goes up, demand goes down; someone send this idiot a copy of Samuelson. The market is ALWAYS well supplied at the market price. That’s why they call it “THE MARKET PRICE”.
I’m going to give up on my campaign to “educate idiots”.
TwinPerformance on Fri, 17th Jan 2014 7:17 pm
Conventional economic growth theory actually states as price goes up, more production is put in i.e. growth.
The issue is when price rises (demand I know) and production cant keep up with rising consumption. essentially growth stops. Consumption however increasing exerts an upward pressure anyhow. Reducing oil consumption (i.e. 3 car families going to 2 car families, then one car) while increasing prices slowly. consumers adapt, however with no growth, wages stagnate but the cost of everything else rises as consumption rises still. More become unemployed etc reducing consumption.
It ends in collapse, as our financial system requires growth to service such debt. Our governments currency is being sacrificed to keep the ship stable as it were. However this just means when a collapse occurs it more likely to be a single cascading KO of global civilisation (with a domino effect in turn)
shortonoil on Fri, 17th Jan 2014 10:54 pm
“Conventional economic growth theory actually states as price goes up, more production is put in i.e. growth.”
When carrots are selling for $1 a bunch, you sell carrots. When carrots are selling at $1000 a bunch it doesn’t make a bit of difference how many carrots are grown. No one is going to buy them! Producers will price their commodity at the price that yields the highest profit. Production is not a response to price, it is a response to maximum PROFIT!
Consumer will buy more gasoline at $0.28 than they will buy at $4.00. We are producing more gasoline not because the price is higher, it is because there are more consumers. World population hit 7 billion recently, and China and India have fallen in love with the automobile.
A point will be reached when no one will want to buy petroleum. The point of maximum profit for the producer will be zero production.
M. King Hubbert said it a long time ago:
“So long as oil is used as a source of energy, when
the energy cost of recovering a barrel of oil becomes
greater than the energy content of the oil, production
will cease no matter what the monetary price may be.”