On July 23, Brent crude oil September futures settled ~$5.17 higher than WTI crude oil September futures. On July 16, the spread was at ~$4.77.
Between July 16 and July 23, Brent crude oil September futures rose 1.7%. WTI or US crude oil September futures rose 1.2% during this period.
In the seven days that ended on July 23, the United States Brent Oil ETF (BNO) rose 2%, and the United States Oil ETF (USO) rose 1.1%. BNO tracks Brent crude oil futures, while USO follows US crude oil futures.
US crude oil exports
The chart above shows the broadly positive relationship between US crude oil exports and the Brent-WTI spread since December 2015. Exports seem to follow the Brent-WTI spread with a lag. The United States lifted a ban on US crude oil exports in December 2015. Since then, US crude oil production has increased ~19.8% to a record high of ~11 MMbpd (million barrels per day) in the week that ended on July 13.
US crude oil exports have risen ~0.73 MMbpd year-over-year. However, in the week that ended on July 13, US crude oil exports fell ~0.56 MMbpd to ~1.5 MMbpd—their third consecutive fall and the lowest level since the week that ended on April 6.
Any further upside in the Brent-WTI spread could be a positive development for US crude oil exports in the coming weeks.
Brent-WTI spread and US energy companies
A widening Brent-WTI spread is good for US refiners and US oil exporters, but it’s a disadvantage for US oil producers selling in the US market. A narrowing spread has the opposite effect.
On July 20, the Brent-WTI spread fell to $2.61—its lowest level since July 31, 2017. Between July 20 and July 23, the Brent-WTI spread expanded by ~$2.56, while the VanEck Vectors Oil Refiners ETF (CRAK) rose 0.3%.
CRAK is made up of refining stocks. Phillips 66 (PSX) and Valero Energy (VLO), which account for ~16.5% of CRAK, have both risen 0.1% since July 20. An expansion in the Brent-WTI spread could be favorable for US refining stocks in the days ahead.