Brent and WTI crude oil
The Brent and WTI (West Texas Intermediate) crude oil futures, for August delivery, differential rose more than $5 per barrel as of July 1, 2015. The US benchmark WTI fell by $2.51 per barrel and settled at $56.96 per barrel on July 1, 2015. Likewise, Brent fell by $1.58 and closed at $62.01 at the end of trade yesterday.
This is the widest gap between WTI and Brent since June 10. WTI fell due to a rise in US crude oil stocks reported by the EIA (U.S. Energy Information Administration). Likewise, Brent fell due to the massive supply consensus on a possible positive outcome from Iran’s nuclear talks. However, a lack of clarity in the Iran talks led to a possible short covering and Brent prices recovered.
The wider spreads benefit US refiners like Marathon Petroleum (MPC), Tesoro (TSO), and Valero Energy (VLO). They account for 7.12% of ETFs like the Select Sector SPDR Fund ETF (XLE). In contrast, a narrow spread benefits US crude oil producers. Volatility in the crude oil market also impacts ETFs like the Select Sector SPDR Fund ETF (XLE) and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).
US and global oil benchmarks
WTI is the US benchmark for crude oil. It’s priced at Cushing, Oklahoma—the futures contracts delivery point for NYMEX crude oil. WTI is the receiving price of oil producers in the US. Likewise, Brent crude oil is the international benchmark for crude oil. Brent oil represents the receiving price of international oil producers.