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WTI and Brent Crude Oil Set New Highs on the Same Day 

 

 

Dr. Jesse Yoder, President, Flow Research.com
Email: Jesse@FlowResearch.com

 

Wakefield, Massachusetts (April 5, 2019) ó The price of West Texas Intermediate (WTI) crude oil closed at $63.11 per barrel Friday, April 5, the highest closing price since November 5, 2018, when it closed at $63.12.  Brent crude oil also set a record, settling at $70.34 per barrel on April 5, its first close over $70 per barrel in five months.  Brent oil typically trades $5 to $7 higher than WTI.  Prices are expected to stay in a similar price range for most of the year.

WTI is traded on the New York Mercantile Exchange (NYMEX) and is composed mainly of oil drilled in the United States from fields in Texas, North Dakota, and Louisiana.  WTI is transported to Cushing, Oklahoma, where it is stored.  About 90 million barrels of oil are stored in Cushing, Oklahoma.  WTI is considered a benchmark for U.S. oil prices.

Brent crude oil is extracted from oil fields in the North Sea.  Brent is mainly extracted from four oil fields in the North Sea.  While it is considered to be both light and sweet, it is slightly heavier than WTI.  Brent futures are traded on the ICE Futures Europe in London.  The price of Brent crude is a benchmark for oil produced in the North Sea and sold in Europe, Africa, Australia, and some Asian countries.

Some analysts attributed oilís record-setting performance on April 5, 2019, to a strong US employment report, at least temporarily dispelling fears of a global slowdown.  However, there are more fundamental forces at work underpinning this market.  Supply cuts led by OPEC, combined with U.S. sanctions against Iran and Venezuela, are credited with tightening global inventories and causing crude prices to jump by about a third since the beginning of 2019.  At its 175th meeting in Vienna, Austria, on December 6, 2018, the Organization of Petroleum Exporting Countries (OPEC), together with Russia, agreed to cut crude oil production by 1.2 million barrels per day.  Prices began climbing at the beginning of 2019.

We believe this is good news for the oil & gas industry, as well as for flowmeter and instrumentation manufacturers who support it.  The rise and stabilization in the price of crude oil since early 2017 has caused a tremendous increase in the amount of oil and gas exploration and production activity worldwide.  It is again profitable to drill in many locations where it had not been economical, and closed wells have now been re-opened to production.  Shale drilling and petrochemical plant construction have also increased worldwide.  The recent highs show the oil market is headed upward, and supply and demand considerations suggest that it is unlikely to retreat to pre-2017 levels anytime soon.

Oil Prices Since 2011

The per-barrel price of WTI crude oil remained mostly between $80 and $100 from January 3, 2011, until August 2014.  Beginning in August 2014, oil prices began to decline steadily from the $100 level.  This decline continued down to less than $30 per barrel in February 2016.  While some of the price fluctuations were due to the Arab Spring uprising, to Louisiana hurricanes, and to other events that temporarily affected oil prices, the main driving force behind this decline was supply and demand.  When world oil supply exceeds demand, prices typically decline.  When oil demand exceeds supply, oil prices tend to rise.

For more details, go to www.worldflow.com and click on Flash Reports.

 

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