WTI and Brent crude: Distinct energy markets

The direction was reversed back in 2012 to counter the growing glut of supplies landlocked mid-continent, and the capacity was expanded from 150,000 barrels per day (bpd) to 400,000 bpd in 2013. By mid-2014 the capacity is expected to increase to 850,000 bpd, helping to alleviate the bottleneck, and depress the spread between WTI and Brent crude.

While in the medium term, pressure from infrastructure expansion should lead to a tightening of the spread, continued growth of U.S. production will keep a lid on WTI prices (Chart 4). Short traders should stay focused on US crude, while those trading with an eye on geopolitical factors should favor Brent’s more global footprint.

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