US crude trades at brief, rare premium to Brent

US crude oil prices rose briefly to a premium over the international Brent benchmark following news of a surprise fall in US stockpiles.

Inventories fell by 3.6 million barrels in the week, to 486.7 million, according to the industry group the American Petroleum Institute, compared with analysts’ expectations of a rise of a little over a million. Official data will follow later on Wednesday.

Front-month US West Texas Intermediate crude futures were trading at $36.38 per barrel at 0340 GMT, up 24 cents from their last settlement price. Brent crude earlier traded as low as $36.28, briefly taking WTI from a discount to a slight premium for the first time since November last year.

Before the onshore shale boom was up and running in 2010, WTI was usually at a premium to Brent. However, thanks to shale, US imports have fallen from a peak of almost 14 million barrels per day to around nine million, according to government data.

 

Now, with shale output contracting in the face of low-cost competition, the US market could tighten while supplies globally keep ballooning on the back of soaring output from producers like Russia and the OPEC group. Congress this month voted to lift the 40-year old ban on exporting domestic crude supplies, and although no major large-scale exports are expected, some American oil will hit the oversupplied global market next year.

 

First published here: http://news.markets/commodities/us-crude-trades-at-brief-rate-premium-to-brent-7282/