Analys
Brent oil continues to appear immune to negative news
- WTI forward curve at the front-end as steep as four years ago
The Brent price appears immune to the negative news. US crude oil stocks surged significantly once again mid-week, and yesterday saw the US dollar appreciate massively. Nonetheless, Brent is trading at over $61 per barrel again after dipping at the start of the week, and is likely to close the current week of trading up overall. At least the WTI price is trading more or less in tandem with the fundamental data. WTI is priced at less than $50 per barrel and is down week-on-week. The price differential between Brent and WTI has meanwhile widened to $12 per barrel – the last time this happened was in January 2014. What is no less remarkable is that the price gap between the front-month WTI futures contract and the subsequent contract now exceeds $2 per barrel. The last time the WTI forward curve was this steep at the front end was in February 2011. The weak WTI price and the considerable discount on the front-month WTI futures contract can be explained by the rapid increase in US crude oil stocks. This is likely to continue in the coming weeks, partly because the pronounced contango in the WTI forward curve continues to make it attractive to stockpile in the US. Baker Hughes will be publishing new drilling activity figures this evening, which could weigh on the WTI price if they show that the decline in the oil rig count in the US has further slowed.