The Brent-WTI spread
On December 29, 2017, the price difference between Brent crude oil (BNO) active futures and WTI (West Texas Intermediate) crude oil (USO) (UCO) active futures was $6.45. That is, Brent crude oil futures settled at $6.45 per barrel higher than WTI crude oil futures. On December 22, 2017, that price difference, or Brent-WTI spread, was $6.26.
Between December 22 and December 29, 2017, both WTI crude oil active futures and Brent crude oil futures rose 3.3%.
US oil exports
In the week ended December 22, 2017, US crude oil exports fell 648,000 barrels per day on a weekly basis to 1.2 MMbpd (million barrels per day). In 2017 as of December 22, 2017, on average, US crude oil exports were ~0.5 MMbpd higher than 2016. It may concern oil bulls because rising US supply to the global oil market could hamper oil’s gain in 2018.
For US oil producers (XOP) (DRIP), a higher Brent-WTI spread could mean less value for their output in the domestic market compared to what their international peers receive. US oil producers’ output is mainly benchmarked to WTI crude oil prices, while the output of international peers is generally benchmarked to stronger Brent oil prices.
But for US refiners (CRAK), a higher Brent-WTI spread could increase their profits. US refiner output follows stronger Brent oil prices. So by increasing the share of WTI crude benchmarked oil in their input, they could increase their profit margins.