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The
monthly average U.S.-dollar price of West Texas Intermediate (WTI) crude oil edged
higher in August, rising by $1.60 (1.5 percent) to $106.21 per barrel. That price
increase coincided with a negligible weakening of the dollar and the lagged
impacts of a rise in consumption of 173,000 barrels per day (BPD) to 18.7
million BPD in June, but occurred despite a modest increase in crude stocks. Tensions
in the Middle East also contributed to the price rise.
The
monthly average price spread between Brent crude (the predominant grade used in
Europe ) and WTI collapsed in July by nearly
two-thirds, to $3.32 per barrel; explanations for the narrowing vary, but it is
possible that impacts of the Fed’s quantitative
easing are finally showing up in the WTI price.
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Given
that futures prices are in backwardation, it appears traders are discounting
any extended supply disruptions from potential U.S. Syria
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The foregoing comments represent the
general economic views and analysis of Delphi
Advisors, and are provided solely for the purpose of information, instruction
and discourse. They do not constitute a solicitation or recommendation
regarding any investment.
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