Mind the gap: Brent and WTI point in opposite directions – Kemp

13 Sep 2017   Prices

Commuters and tourists are regularly warned to “mind the gap” between train doors and the platform at certain stations on the London Underground. But the warning could just as easily apply to traders in Brent and WTI after the two crude benchmarks diverged sharply over the last month. Commodity markets abhor a gap and will find a way to arbitrage it away. Such a large gap between forward Brent and WTI prices is unlikely to persist for every long. Either Brent prices and calendar spreads must weaken, WTI prices and spreads must strengthen, or some combination of both. In the short term, Hurricanes Harvey and Irma have extensively disrupted oil refineries, distribution systems and motorists along the U.S. Gulf Coast. The result has been to cut […]

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