There's another thing to add to your comment. As SA refines more of it's own oil, less is sellable on the exchanges. This could have a weird effect. lately WTI has trailed Brent by a pretty wide margin, as much as almost $4 for a brief time. This is VERY significant.

As more refineries open in Asia and Close in America, the US petroleum reserve and WTI oil have less of an effect on price. Why would someone buy $68 light sweet in Beaumont for delivery in 2009 sitting next to a trillion barrels that can be fed to a dwindling number of refineries when they can pay $47 for the Saudi basket deliverable to indonesian refineries.

People seem to forget, benchmarks are only good if they reflect real supply demand. That's why the Omani benchmark isn't used any more. This is why the crack spread is so wide. Spot price is a supply chain phenominon, as Platts loves to remind us.

Excellent point. I have made a number of posts recently explaing why WTI is a poor benchmark for crude pricing. Cushing is landlocked and the pipelines servicing it are mostly owned by the refineries who also happen to own the storage tanks.....

Interestingly though, TEPPCO is allegedly discussing reversing the flow on the Seaway pipeline (currently flowing 280-350 kbpd from Freeport TX to Cushing) and will announce today the completion of the Takeaway pipeline from Midland TX to New Mexico (which will also reduce flows to Cushing).

lately WTI has trailed Brent by a pretty wide margin, as much as almost $4 for a brief time. This is VERY significant.

Yes, it is significant, but what does it really mean? My take is that it reflects the premium for tanker delivery as opposed to Cushing delivery. That Asian refiner is not exactly at the end of the NA pipeline system.

it reflects a heavily contangoed market. Nobody really needs prompt wti and storage is full. The fear factor is boosting later delivery and more so in Europe as Iranian crude is actually refined there in a significant amount.

what????

Refineries may have closed in the USA, but we are refining a record amount of crude. The number of crude units is not meaningful. Their capacity is.

Brent/WTI is not really that inverse to normal. You are looking at prompt futures to prompt futures and there are no jet deliveries of crude oil to make that happen. When April WTI dropped to $56, May was $59. Brent was a only a little over May.

My guess is Brent is over WTI right now because European refiners actually use Iranian crude and are nervous about it. Also May/June is maintenance season in the North Sea. Its the period when the BSDs would try squeezes as production was at its min while demand was good.