Summary:
- Oil falling lower after Friday’s surge
- Brent underperforming compared to WTI
- Brent-WTI spread narrows considerably
The price of Oil is falling today as the rally seen following the latest OPEC decision on Friday appears to have fizzled out. The rally itself was formed on a questionable basis when you consider that the market surged despite the group increasing their production quotas, with the move seemingly due to a relief that a deal was reached after Iran had looked like they may not agree.
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Oil has come back under pressure today after experiencing a rally on Friday following the latest OPEC+ announcement which will see an increase in production going forward Source: ICE, Bloomberg
Of particular interest since the meeting has been the divergence seen in the performance of Brent crude (Oil on xStation) and that of WTI (Oil.WTI on xStation). Looking at these 2 markets today there is a notable difference in the price action of two markets which are often highly correlated. Oil is lower by more than 2% at the time of writing while Oil.WTI is only 0.4% in the red. Oil could be coming under more selling pressure because an increase in OPEC production may be more directly related to Brent, rather than WTI, while the latter is supported by the forthcoming US driving season.
There’s been a sharp narrowing of the Brent-WTI spread in recent trade with a move from above $10 a barrel to just over $5 at present. Source: ICE, Nymex
Looking at xStation and utilising the compare charts function, we can compare these 2 markets. The move has been most apparent since Friday when Oil.WTI experienced a far stronger move higher following the OPEC news. Today it’s been the other way around with Oil falling harder than Oil.WTI as this divergence begins to grow.
Oil.WTI is clearly outperforming Oil in recent trade with the market moving more strongly to the upside and Friday and not falling as far today. Source: xStation
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