The price differential between WTI and Brent continues to widen, briefly hitting $9 per barrel on Monday, the largest discount in about three years. (Click to enlarge) Discounts of this magnitude are pretty rare, particularly after the U.S. began exporting crude oil several years ago. There is a self-limiting aspect to these price differentials. If WTI falls significantly lower than Brent, then American crude oil becomes highly attractive to foreign buyers. Refiners around the world move to purchase as many cargoes as possible, removing the surplus from the U.S. while at the same time loosening demand on Brent cargoes. The result is that there is pressure on the two benchmarks to converge once again. We saw this play out last year after the devastation from Hurricane Harvey, which decimated refining capacity in the U.S. and led to a buildup in crude oil supplies. The discount, which jumped from just […]