Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
My gut says it's mostly about Nigerian production being well under normal and a great fear it could go even lower with more strife.  Nigerian prices off of Brent and is used by both North Eastern US refiners and European refiners. It is rich in gasoline and is prized by those refiners especially in summer to meet mogas demand. North Sea light sweet (Brent) is being bid up as a result as it is the substitute for these refiners, none of whom can access WTI in Oklahoma storage.

It's also about actually having plenty of crude oil in an inland location of the US.  Inland stocks are high on crude so WTI is in contango (prompt under outers) on the futures market.  No one is living in fear of getting their next bbl of WTI but there is concern prices will be higher in the future.  You can deliver Brent against a WTI contract (with penalties that make it silly in real life).  But pumping WTI to the sea to deliver against Brent is damn near impossible.

On the 25th the settles were  (from nymex.com -- you have to accept their disclaimer so I can't link to the data directly).

      WTI       RBOB (gasoline)    Crack
June   expired     $2.40           $35.6 (to July)
July  $65.2        $2.31           $31.8
Aug   $66.62       $2.25           $27.9
Sept  $67.53       $2.18           $24.0
Oct   $68.26       $2.02           $16.6
Nov   $68.82       $1.95           $13.1
Dec   $69.26       $1.92           $11.38

I can't find similar free data on Brent

Those gasoline cracks are about lack of refinery capacity relative to demand.  Demand shot through the roof the last 10 years while refining capacity has only been creeping up slowly.  Lots of maintenance and accidents this spring has people up tight that we could actually have a real shortage.  Also we have predictions of an ugly hurricane season.  So plenty of bids and few short sellers on gasoline.

by HiD on Mon May 28th, 2007 at 08:47:34 PM EST
[ Parent ]
those cracks make my eyes hurt.  When I wasn't retired, a mogas crack at $8 was considered high.
by HiD on Mon May 28th, 2007 at 08:49:03 PM EST
[ Parent ]


Top Diaries

Occasional Series