WTI-Brent spread narrows as oil market tightens

LONDON, June 21 (Reuters) – The price gap between the world’s two most actively traded oil contracts narrowed to its lowest in more than seven months, demonstrating that U.S. oil output is still in the COVID-19 doldrums with the market likely to remain undersupplied. North Sea Brent futures traded at a premium of $1.89 to U.S. West Texas Intermediate (WTI) on Friday, its narrowest since Nov. 11. “We believe that the recent narrowing of the WTI-Brent price spread … is noteworthy, with North America taking the mantle from Chinese demand or OPEC cuts and disruptions in tightening the global oil market,” Goldman Sachs said in an analysis. At the same time a quick COVID-19 vaccine rollout in the United States has revived the economy there while U.S. shale oil companies have held off from a rapid ramping up of output and appear to be holding out for higher oil prices and returns. “Local demand is rebounding sharply while shale producers remain disciplined, with the U.S. and Canada set to deliver this summer a net reduction in crude exports to the global market larger than Saudi’s unilateral cut earlier this year,” the bank added. Earlier in the pandemic a relatively quicker… continue reading

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