There are interesting moves with the different oil prices worth investigating.
The two main benchmarks in the crude oil market are West Texas Intermediate (WTI) and Brent. US oil is priced off WTI while the latter is, in effect, the global yardstick.
In recent years Brent has typically traded at a premium to WTI. This has reflected the emergence of a big new source of supply in the US as operators in the country have unlocked the crude contained within shale rock.
This was the case earlier in the summer when the spread was pushing $10. However, in recent days this situation reversed and for a time this week Brent was actually trading at a discount to WTI.
This followed the biggest one-day decline in Brent in more than two years as trade war fears began to ramp up.
Oil is one of the key engines of economic growth and prices are closely linked to the fortunes of the global economy.
As the effective world oil price, Brent would be more exposed to a slowdown in global trade while WTI’s performance is more closely tied to a relatively robust (for now) US economy.
Brent currently trades just $3.15 above WTI.
