Crude Breaks Out
Crude oil on the NY Merc has broken out above the most recent highs:
In addition, U.S. crude Dec. 2011 contract trades above Jan. 2012. Crude oil is in backwardation.
For some time there has been a price difference between domestic crude and Brent Oil, with Brent selling much higher.
Rival global benchmark London-based Brent LCOc1 has traded at a steep premium to U.S. crude CLc1 over the past year as North Sea supply problems and the loss of Libyan crude inflated the prices of seaborne crude, while the land-locked U.S. benchmark has been depressed by rising Canadian oil sand and U.S. shale oil production.
We know that price discrepancies can’t last forever. Midwest refiners have been buying oil domestically as much as $25 cheaper than Brent and making big profits by selling byproducts near Brent. Now oil producers are selling crude on the coasts where price is closer to Brent.
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