WTI Crude Price Disconnect Fuels Market Volatility
West Texas Intermediate (WTI) Crude oil is currently trading at around $90 per barrel, but this price is not what refiners are actually paying for a shipment of crude. The WTI price represents the future value of a barrel of U.S. oil on paper, and it's not reflective of the current physical market.
The difference between the 'paper' price of Brent crude and what refiners pay for it has widened to $26, according to Joe DeLaura, senior energy strategist with Rabobank. This gap is a result of the tight physical market caused by the Iran war, which is affecting the availability of oil.
'Physical buyers are dealing with barrels available soon, right now, a specific point in time,' said Dan Pickering, chief investment officer at Pickering Energy Partners. 'And those two markets, financial versus physical, can diverge, and have diverged.'