The WSJ’s Environmental Capital blog notes that the price for “WTI”, which is to say the price for West Texas Intermediate grade of crude oil, a commonly used benchmark for quoting crude oil prices, has been drifting out of the usual relationships with other commonly used benchmarks, like Brent crude. (Here is Wikipedia on WTI and Brent.)
Essentially that means once Cushing storage nears capacity WTI will become increasingly depressed versus other crude grades and therefore disconnected from real oil supply/demand fundamentals. As a result it will no longer be a good indicator of US crude prices.
While at The Barrel, the WTI price movements are reflecting reality:
So it’s WTI that’s reflecting what is going on in the world: the collapse in demand, oversupply and a resulting enormous contango that is encouraging storage. On this one, WTI is ahead of the curve, not behind.
Why the difference?
Maybe where you sit affects what you see. Should I say more clearly that the U.K.-based Alphaville blog favors the local Brent benchmark, while the U.S.-based The Barrel thinks that WTI is all right.
My view, from here in Lubbock: West Texas Intermediate is A-OK.