gas prices Archives
Viewing articles tagged ‘gas prices’

The Positive Side of the WTI-Brent Spread

by Dr. Kent Moors | published February 17th, 2012

The spread between the West Texas Intermediate (WTI) benchmark crude contracts traded on the NYMEX and Brent crude traded in London is widening again.

When the market closed yesterday, the spread once again approached 20% of the WTI price (This is more accurate way to measure the spread).

Brent is fast approaching $122 a barrel; WTI stands north of $102.

Both benchmarks have accelerated; and both are now up 2.5% for the week.

Brent is also up 10.2% for the month, while WTI started its climb just recently. All of its monthly gains (at 2.4%) occurred in the past week.

But it’s not just the rising price tag that has us concerned.

We are fast approaching that time of year when gasoline and diesel demand are at their peak.

In the U.S., more than 20 municipalities will introduce new summer gasoline mixtures by May 1.

Now you might never have heard of this. But there are two types of seasonal gasoline.

There is a winter-blend and a summer-blend fuel.

The summer blend is mixed to cause less smog from its emissions. It is also designed to reduce pressure in your gas tank when summer weather reaches scorching temperatures.

Those additives traditionally add about 15% to the cost of a gallon of gas. And, the transition requires that U.S. refineries temporarily retool their production capabilities, which can lead to a short-term supply dip.

We will certainly see the highest gasoline costs on average in the U.S. market this summer.

Just how high?

Europe’s New Economic Crunch (Oil Prices Sure Aren’t Helping)

by Dr. Kent Moors | published September 16th, 2011

As we sit down here in Krakow to begin government sessions on shale gas policy, and European Union ministers meet in the southwestern city of Wrocław, Poland, thoughts are turning once again to oil pricing…

In case you haven’t been watching, Brent prices in London trade are accelerating, approaching $113 per barrel, while the West Texas Intermediate (WTI) benchmark traded in New York is about to break the $90 per level again.

The spread between the two remains at all-time highs, indicating that Brent will continue to appreciate quicker than U.S. pricing, although both are rising.

That spread is “in favor” of Brent.

This creates a continuing problem for the E.U., which is faced with mounting eurozone currency and liquidity problems, weakness in its banking sector, and a European Central Bank that’s experiencing dissent – within its own ranks – over the proper course of action.

Today’s meeting in Wrocław concerns whether Greece will receive the next tranche of a bailout package. That package is already widely perceived as being insufficient to prevent some sort of Greek default. Plus, the Germans are taking a hard line on what is necessary for that largess to keep coming.

Meanwhile, the internal dispute is getting intense.

A good example is the decision made this morning by the ministers. Or actually the non-decision. The ministers decided… not to decide until next month.

The prospect of higher prices for Brent further complicates matters with the common currency.

The euro has been losing ground against the dollar throughout the latest period of the debt crisis. Of course, that says less about the dollar’s strength that it does about the euro’s enduring weakness.

That, combined with a rise in the cost of energy, means Europe is facing the prospect of a new economic crunch.

This one has the potential of completely derailing this continent-wide recovery already distinctive for its anemic performance.

In Krakow, Too, Our Problem Is Oil

There are essentially three reasons Poland has decided to expedite decisions on developing its domestic shale gas.

First, they may well have a lot of it. The estimate I will be giving them puts the extractable reserves in the five basins already identified in the country at more than 187 trillion cubic feet, or five times the rest of Europe combined.

Second, Poland is dependent upon Russian imported gas, introducing the latest stage in a political disagreement 500 years in the making.

But it is the third reason that is most compelling…

Click here to continue reading…