Trader moves split crude futures
Brent crude futures jumped on Monday while US crude futures fell as a trading ploy pushed the two benchmarks further apart than ever before, Reuters reported.
News wires 13 June 2011 14:01 GMT
Concern over predicted higher second half 2011 demand set against OPEC's failure to raise output as a group were behind the strength of Brent, a price marker for the trade in oil cargoes, the news wire reported traders as saying.
Brent crude bounced from earlier losses and surged by $1.24 to $120.02 by 12:22 GMT.
But US crude futures slipped by 75 cents to $98.54 a barrel, Reuters continued.
The discount of US crude to ICE Brent crude briefly widened to a record $20.98 a barrel and it was at $20.93 by 12:00 GMT.
US crude has been trading at a steep discount to ICE Brent futures this year due to rising flows of Canadian crude into the Cushing, Oklahoma, delivery point of the US West Texas Intermediate crude contract, via pipeline.
"Brent prices appear to reflect geopolitical risk and world market conditions while WTI is likely to remain isolated from world market events as a result of high stocks in the US mid-continent," Christophe Barret from Credit Agricole told Reuters.
There has been a lack of infrastructure to move that crude to the large concentration of refineries along the US Gulf Coast, keeping the discount steep, according to Reuters.
"Until there are pipelines to take crude away from the Mid West down into the US Gulf, this will continue," Christopher Bellew at Bache Commodities told the news wire.
The world's top oil exporter Saudi Arabia will raise output to 10 million barrels per day (bpd) in July, Saudi newspaper al-Hayat reported on Friday, as Riyadh goes it alone in pumping more outside official OPEC policy, aiming to place additional supplies among Asian buyers.
However, Brent was responding to the OPEC's official output, which was left unchanged due to a lack of an unanimous agreement, Bellew added.
Underproduction of the key North Sea Forties crude and a lack of Libyan crude exports were also exacerbating the premium on ICE Brent futures.
Published: 13 June 2011 14:01 GMT | Last updated: 37 minutes ago |
