Brent’s premium to West Texas Intermediate crude narrowed to less than $10 a barrel for the first time in 15 months as demand faltered and North Sea supply recovered after oilfield maintenance.
The difference between the two benchmarks shrank to $9.77 a barrel today, the least based on settlement prices since since Jan. 3, 2012. It expanded to a record of more than $28 a barrel in intraday trading in October 2011. The most widely traded commodity futures differential has narrowed amid the restoration of North Sea output, reduced demand estimates and diminished concern that Middle East political tension will disrupt supplies.
“The current tightening of the spread is attributable above all to Brent-specific factors, such as the normalization of North Sea supply and weaker demand for North Sea oil,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt.
Brent has slumped as the return of North Sea oil fields such as Buzzard and Elgin-Franklin last month after repairs coincides with weaker demand forecasts and diminished concern that the dispute over Iran’s nuclear program will escalate. U.S. benchmark WTI rose this year as expanded pipeline capacity helps relieve a glut at the nation’s storage hub in Cushing, Oklahoma.
Brent has lost 6.9 percent in 2013, ending today at $103.41 a barrel on the London-based ICE Futures Europe exchange. WTI on the New York Mercantile Exchange settled at $93.64, up 2 percent year-to-date.
Daily exports of North Sea Brent, Forties, Oseberg and Ekofisk crudes, which make up the Dated Brent benchmark, will increase by 1.5 percent in May from this month to 893,548 barrels a day, loading programs obtained by Bloomberg News show.
WTI moved to a gain for the year in today’s trading. Its declines were contained as expanded pipeline capacity eased a glut at the U.S. storage center in Cushing. Enterprise Products Partners LP and Enbridge Inc. switched the direction of the Seaway line last year to move barrels from the Midwest and Canada to Houston.
Oil consumption in the most developed European economies will drop to 13.4 million barrels a day this year, the lowest since 1985, the International Energy Agency said in its monthly market report on April 11.