It's been awhile since I had written, for lack of time, contenting myself with a few short messages of less than 140 characters Twitter. Before presenting my opinion on crude oil, one side at the NYMEX, that is to say, or WTI West Texas Intermediate, a light oil of high quality, let me answer the question concerning the considerable gap between WTI and Brent, an issue that comes up very often, and whose explanation is often wrong.
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While traditionally their Prices were very close, Brent and WTI are currently experiencing a price difference of about $ 15 for Brent or more. Sometimes I read (especially on forums boursorama) as Brent is better, yet it is not. Or that stocks of Brent are smaller than those of WTI (yes, the North Sea fields declines awfully fast). The reason for this increase in the spread is different.
Why?
WTI is actually better than the Brent North Sea (which is why, once, WTI was trading a little more expensive than Brent). This explains the low cost compared to WTI Brent actually lies in the fact that the shipping contracts for WTI is completely saturated. This is Cushing, Oklahoma, a small town where many pipelines converge. And what has since junction with Canadian pipelines has been carried out, stocks are high, which explains why the American oil is cheaper than petroleum Europe, which is more representative of world crude oil prices incidentally.
This gap is expected to persist at least some time, potentially until 2013-2014, when new pipelines will move quickly and plenty of WTI to markets where oil is trading at higher prices. After that, the premium paid for the Brent should be, or at least be reduced.
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| Map of pipelines in the USA: Framed Cushing (theodora.com) |
Spread sustainable short and medium term only:
However, it seems possible that the premium will increase further, for the simple reason that traders and transporters have now strong incentives to deliver oil from Cushing to other markets. It would be profitable to take delivery at Cushing, OK, before you load the oil on trucks or trains to the Gulf of Mexico, before any transfer to a tanker towards Europe.
But in addition to other continents, it is important to note that gasoline prices are already very different in the USA. WTI is really that representative of the oil used in the Midwest. And the year 2011 marks the comeback of transporting petroleum products by rail, 150 years after the track has revolutionized transportation once done horseback. Like what the train again and again in the future, I can only be the opinion of Warren Buffett, I recall, was acquired from Burlington Northern Sante Fe in late 2009.
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| Adam Johnson, Bloomberg TV |
affordability U.S. crude is an illusion:
Most other regions are already forced to buy their fuel more expensive, and the apparent weakness of the U.S. oil price is actually a decoy. Oil is already worth U.S. $ 100, even though more than that. So, now, a gallon of gas (3.79 liters) costs just over $ 3 near Cushing, as well as in Dakota, cons already over $ 3.60 throughout California and across much of the state of New York.
Note that the fuel bill would rise by U.S. $ 80 billion (and 76 billion dollars in Europe) if prices were to stabilize at current levels. Thing they most certainly will not, oil is anything but a stable active!
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