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US Crude Oil and Brent Crude Oil Spread Widens

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Jun. 11 2015, Published 10:24 a.m. ET

Brent and WTI price movement

July Brent crude oil futures contracts settled at $65.70 per barrel. WTI (West Texas Intermediate) futures for July delivery settled at $61.43 per barrel on June 10, 2015. The WTI and Brent differential was at $4.27 per barrel as of June 10, 2015. The June 2015 average spread is at $2.92 per barrel—compared to the average spread of $4.81 per barrel in May 2015.

On June 9, 2015, the EIA (U.S. Energy Information Administration) published its monthly STEO (Short-Term Energy Outlook). According to the report, Brent crude oil prices could average around $61 per barrel in 2015 and $67 per barrel in 2016. The EIA also added that WTI crude oil could also average around $56 per barrel in 2015 and $62 per barrel in 2016. The spread between WTI and Brent crude oil is at $5 per barrel.

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The broader spread Brent crude oil and WTI crude oil prices benefit US oil and gas refineries like Marathon Petroleum (MPC), Phillips 66 (PSX), and Valero Energy (VLO). Combined, these companies account for 7.57% of the Energy Select Sector SPDR ETF (XLE). They also impact energy ETFs like the SPDR Oil and Gas ETF (XOP) and XLE.

Crude oil price benchmarks

The benchmark crude for the US is WTI crude oil. The US benchmark is priced at Cushing, Oklahoma—the delivery point of the NYMEX oil futures. WTI’s crude oil price represents the receiving price of oil producers in the US. WTI oil prices drive US oil producers’ margins. Likewise, Brent crude oil is the benchmark of the international crude oil price. It represents the receiving price of international oil producers. A wider spread benefits US refiners, while a narrower spread benefits US oil producers.

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