What's Moving the Oil Markets?

•The ongoing divergence between Brent and WTI futures continues to surprise the market. With the Brent/WTI spread for April in the past few days going through the roof, the situation for May is not much different. The current spread has already broken through the $3/b mark, which is regarded as highly unusual by market participants. "The relationship between Brent and WTI is very unusual for that time of the year as normally, when going into the spring and summer demand season, light crude is in very good demand in the US," one London-based broker said.

•-"The main reason for WTI's weakness is just that there is too much crude around in the midwest of the US, around Cushing. WTI is available at discounts at refinery gates in the USGC...given that, I expect further weakening next week," the broker said.

•From a fundamentals point of view, little has happened to surprise the market this week. On Thursday, OPEC's ministers agreed in Vienna to maintain current crude oil output limits set at 25.8 million b/d for the 10 members bound by production pacts, which was widely expected by the market.

Updated: March 16, 2007