The Oil Trade Showing Where OPEC’s Cuts Are Starting to Bite
- Light-heavy crude spread narrows 50 percent since early June
- Saudi Arabia and other OPEC nations pump mostly heavy crudes
Why Oil Halted Its Advance Near $53
This article is for subscribers only.
As OPEC starts to make its production cuts work, the true impact of its actions is perhaps most in evidence in an obscure part of the physical oil market.
While Brent futures, a benchmark based on North Sea supply, are trading about $4 a barrel higher than their peak in June, the price of cheaper Middle East crude is rising faster still. The gap between the two varieties -- now the smallest in 15 months -- reveals where buyers are experiencing the greatest supply restrictions. It also has the potential to influence where oil flows.