OPEC Deal Points to Weaker Oil Demand and Takes Toll on U.S. Grades
OPEC Deal Points to Weaker Oil Demand and Takes Toll on U.S. Grades
(Bloomberg) -- OPEC’s deal to extend oil production cuts reinforced concerns over a weak demand outlook, taking down Brent crude and the U.S. physical markets with it.
Brent’s premium over West Texas Intermediate crude narrowed to the smallest in nearly a year and pushed the price of U.S. sour crude grades down to similar levels. Gulf Coast differentials typically adjust following WTI-Brent spread movements.
The weak physical differentials follow worries over the state of global demand and growing U.S. shale production that have been highlighted as OPEC and its allies agreed to extend supply curbs into 2020. Now, the narrower WTI-Brent spread will likely slow U.S. crude exports as the domestic benchmark becomes more expensive in global markets.
Bloomberg’s Medium Sour Crude Index, which is an average of daily assessed spot deepwater Mars, Poseidon and Southern Green Canyon crude price differentials, slipped below $2 a barrel on Tuesday for the first time since August.
Light Louisiana Sweet and WTI at Magellan East Houston, two Gulf Coast light sweet oil grades, also hit the lowest levels in almost a year.
To contact the reporter on this story: Catherine Ngai in New York at cngai16@bloomberg.net
To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Jessica Summers, Millie Munshi
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