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The
monthly average U.S.-dollar price of West Texas Intermediate (WTI) crude oil was
essentially flat in May, down $0.08 to $102.09 per barrel. That price decrease
occurred despite a slightly weaker U.S. dollar; but it coincided with the
lagged impacts of another notable drop in the amount of oil supplied in March --
468,000 barrels per day (BPD), to 18.5 million BPD -- which, in turn, caused crude
stocks to contract. The monthly average price spread between Brent crude (the
predominant grade used in Europe) and WTI widened by $1.80 in May, to $7.47 per
barrel.
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The
increase in oil futures prices appears to be primarily a response to news
that perhaps only 4 percent of the previously estimated 13.7 billion barrels of
oil in California’s Monterey Shale formation may actually be recoverable.
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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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