Oil Refiner Trades to Play the Brent/WTI Crude Oil Spread
Richard Bloch submits:On a CNBC "Fast Money" segment on Monday, Joe Terranova suggested a few refiners that could outperform others in an environment where Brent crude oil trades as a significant premium to West Texas Intermediate (WTI) crude. Brent is supposedly a lower quality oil than WTI, yet this premium has been growing higher in recent months as you can see here. Brent has recently traded at $20 more per barrel than WTI. I’m not absolutely sure it’s an all-time record, but I suspect it's close.
Crude Moving Down From Canada
Joe’s suggestions were based on some interesting observations by commodities trader Dennis Gartman on why this spread is so high. (Video available here)
There's just a lot of crude oil moving down out of Canada, making its way into Cushing and forcing out the carrying charge. You’ve got Brent in backwardation. It's tight. You've got WTI in a contango. It’s inComplete Story »