WTI-Brent Narrows this Week on Strong US Exports and Keystone Disruption

The front month WTI-Brent spread has narrowed this week having reached as high as -3.12$/bbl early today with support from robust US exports and Keystone pipeline issues. This week has seen a drop in operating rates at the Keystone crude pipeline transporting Canadian oil to US refineries, to the US Gulf Coast for export and to Cushing.

• The spread has narrowed from as low as -3.6$/bbl earlier this month and from -4$/bbl in early September.
• Inventories at Cushing fell by 1.2mbbls between Sep 29 and 3 Oct according to Bloomberg sources citing Wood Mackenzie data. EIA data for the week to 29 Sep showed a small build at Cushing to 22.09mbbls. Levels are still near to minimum operational lows after falling from 43.2mbbls in late June.
• The Keystone Pipeline flows yesterday rebounded to 0.5mb/d, near the capacity of 0.6mb/d, after operating at around half of capacity at only 0.3m b/ since a disruption on 3 Oct.
• The rate of Cushing inventory declines could slow in the coming weeks as crude demand falls amid heavy refinery maintenance according to Bloomberg.
  • Brent DEC 23 up 0.3% at 84.32$/bbl
  • WTI NOV 23 up 0.3% at 82.56$/bbl
  • WTI-Brent up 0.02$/bbl at -3.18$/bbl