Global oil benchmarks clash post ambiguous Opec pact

seoul — The world’s two most important oil benchmarks are behaving very differently in the aftermath of Opec’s meeting in Vienna.

Brent crude is being pared back by Saudi Arabia’s pledge to boost output after an ambiguous Opec pact and contradictory statements from other nations spurred a price jump on Friday, while shrinking stockpiles are supporting West Texas Intermediate. The spread between the European and US markers narrowed more than 15 per cent Monday and has almost halved in under a week.

While the prospect of more Opec crude is weighing on Brent, Goldman Sachs Group Inc. believes even an aggressive output boost will lead to only a slim surplus that would leave the market with little remaining spare capacity. Stockpiles at the biggest US storage hub have slumped for five weeks with the start of the summer driving season when demand peaks. Those declines may accelerate as a Canadian oil-sands outage leaves North America short of supply, propping up WTI, Goldman said.

“The spread between WTI and Brent is shrinking as Opec’s output increase is having a bigger impact on Brent than WTI,” said Hong Sungki, a Seoul-based commodities trader at NH Investment & Securities Co.