Non-Predictions for 2010: Part 1

The collapse in the price difference between the world’s two most-traded crude oil grades is fulfilling a prediction Goldman Sachs Group Inc. has held for more than a year. Bank of America Corp. says it won’t last.

Oil prices rose about 5 percent last week to finish only a dollar short of regaining triple-digit status. Since dipping below $80 per barrel on October 3, West Texas Intermediate (WTI) prices have increased almost 28 percent. This increase is nearly twice that of the S&P 500 Index, up 15 percent since October 3, but reinforces a recent trend for oil prices—as equities go, so goes oil. This chart put together by the U.S. Energy Information Administration (EIA), illustrates how WTI crude oil prices and equities have moved nearly in tandem over the past few months.

Jaime Macrae submits: It is making headlines; the WTI-Brent Crude spread soared higher, surpassing the all-time high made in February. Back in February, during the opening of the Keystone Pipeline, which brings crude from Canada's oil sands to Cushing, Oklahoma, the delivery point for WTI crude futures, strained storage facilities and led to a glut of supply that depressed local prices causing a dislocation from other global benchmarks like Brent crude.

ByNico Inberg:In my article of April 15th, about selling the price difference between North Sea Brent oil (Brent) and West-Texas Intermediate (WTI), I described why the price spread between the two most important crude oil types should go back to "normal." Normal in this case means an at least higher price for the Am

Enterprise Products Partners LP and Enbridge Inc. have completed an expansion of the Seaway pipeline that will increase the supply of crude oil from the U.S. Midwest to refineries along the Gulf Coast. The 500-mile (805-kilometer) line running from Cushing, Oklahoma, to Freeport, Texas, has resumed full service after shutting Jan. 2 to complete the final connections necessary to expand the line’s capacity to 400,000 barrels a day from 150,000 barrels, the companies said.

While the price of WTI will probably appreciate relative to Brent over the next 12 months, the contract itself has lost its relevance as a marker for global oil markets For the first year since the futures were created, Brent crude is poised to overtake West Texas Intermediate oil as the world’s most-traded commodity.

By Paulo Santos:Crude (USO) has been, for many years, a worldwide market. Yes, there were grades of oil that had different prices, but those different prices had more to do with technical qualities of the oil, it being sour or sweeter, heavier or lighter, than with where it traded.

Dian L. Chu submits: The latest inventory report came out on Wednesday, March 30 from the U.S. EIA (Energy Information Administration) showing Cushing stocks at a record 41.9 million barrels (Fig. 1). And guess what? The news is only going to get worse for WTI longs, as the next couple of weeks will bring the total storage at Cushing close to the max capacity of 44 million barrels due to the fact that more traders took delivery on WTI on the last CL rollover. Click to enlarge