Why Did Brent and WTI Crude Oil Prices Diverge?



US crude oil prices 

June WTI (West Texas Intermediate) crude oil (UCO) (BNO) (VDE) futures contracts rose 0.1% and settled at $49.62 per barrel on April 26, 2017. US crude oil prices rose due to a larger-than-expected draw in US crude oil inventories and record refinery crude oil demand. The S&P 500 (SPY) (SPX-INDEX) fell 0.1% on April 26, 2017. Oil and gas are major parts of the energy sector. The energy sector contributed to ~6.6% of the S&P 500 as of April 21, 2017.

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Brent crude oil prices

Brent crude oil futures fell 0.5% and settled at $51.82 per barrel on April 26, 2017. Prices fell due to oversupply concernspressure oil prices. Brent and WTI crude oil futures diverged on April 26, 2017.

Meanwhile, Brent crude oil prices have fallen ~11.7% YTD (year-to-date). WTI crude oil prices have fallen ~12.6% YTD. The expectation of a strong dollar (UUP) in 2017 could also oversupply concernspressure oil prices.

Crude oil volatility index  

The crude oil volatility index fell 0.2% to 29.3 on April 26, 2017. It hit 24.7 on March 1, 2017—the lowest level since October 2014. Changes in crude oil prices can impact oil and gas producers’ earnings like Noble Energy (NBL), Swift Energy (SFY), Hess (HES), and Triangle Petroleum (TPLM).

In this series  

In this series, we’ll look at US crude oil production, refinery demand, imports, and inventories. We’ll also look at gasoline inventories.

We’ll start by looking at US crude oil prices in early morning trade on April 27, 2017.


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