Brent crude was close to flat on the first day of a new month's contract but diverged further from its U.S. counterpart, highlighting the different pressures on the two grades.
Brent crude was close to flat on the first day of a new month's contract
but diverged further from its
U.S.
counterpart, highlighting the different pressures on the two grades.
January Brent on
London
's ICE
futures exchange was up 10 cents, or 0.09%, at $108.38 a barrel. The December
contract on the New York Mercantile Exchange was down 6 cents, or 0.06%, at
$93.30 a barrel.
JBC Energy analysts, who have repeatedly argued that crude markets were looking
tighter going forward, said the International Energy Agency "moved toward
a similar conclusion by putting the hype on shale oil developments in
perspective on the back of lower production levels in several countries,"
such as Libya, where production is down due to conflict or other factors.
However, U.S. West Texas Intermediate remains subdued, and the oversupply of
U.S.
crude, coupled with a cautious stance by the Federal Reserve on possible
economic growth, may be the reason.
As the two contracts diverge, the "spread", or price difference
between them, has widened to more than $14 Friday.
"The trans-Atlantic spread touched levels not seen since late March with a
near $16 discount for WTI [against Brent] at one point yesterday," said
Andrey Kryuchenkov of VTB Capital.
The International Energy Agency report released Thursday suggested that
"supply side issues will once again dominate in 2014," wrote
brokerage PVM in a note.
They noted several possible changes: Iranian oil returning to the global
marketplace;
Libya
returning to stability;
Iraq
reaching its production targets;
Syria
returning to "normality" and
Nigeria
resolving oil theft problems.
"This gives us an upside of around 3 million barrels a day of which 1.5
mbpd is distinctly possible," they wrote.
ICE's gasoil contract for December delivery was up $1.00, or 0.11%, at $909.00
a metric ton, while Nymex gasoline for December delivery was down 15 points at
$2.6822 a gallon.
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