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Falling Freight Rates Driving Brent-WTI Spread: FGE

OIL

The widening Brent-WTI spread is being driven by falling transatlantic freight rates but could be approaching a limit according to FGE.

  • They see only limited upside as they expect the Dated Brent-WTI spread may reach 7$/bbl in Q1 2023 before dropping to around 4$/bbl in Q3 2023.
  • The spread has increased by approximately 3$/bbl over the past month to around 6.6$/bbl yesterday before pulling back to 6.1$/bbl.
  • US crude exports declined significantly in January down about 500kbpd from December. They see the drop in exports is due to the end of US SPR stockpile releases and contango incentivising storage over exports.
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The widening Brent-WTI spread is being driven by falling transatlantic freight rates but could be approaching a limit according to FGE.

  • They see only limited upside as they expect the Dated Brent-WTI spread may reach 7$/bbl in Q1 2023 before dropping to around 4$/bbl in Q3 2023.
  • The spread has increased by approximately 3$/bbl over the past month to around 6.6$/bbl yesterday before pulling back to 6.1$/bbl.
  • US crude exports declined significantly in January down about 500kbpd from December. They see the drop in exports is due to the end of US SPR stockpile releases and contango incentivising storage over exports.