Thursday, January 20, 2022

A Flip In Oil Markets

 A long time ago, sometime before the 2008 crash, prices of Brent crude oil and West Texas Intermediate (WTI) crude ran close to each other.  WTI would from time to time would exceed Brent, with them kind of bouncing around as they moved along. This changed with the financial market crash of 2008, with Brent becoming chronically higher than WTI, nearly always by several dollars per barrel. For various reasons arbitrage did not operate fully to bring those prices back together again.

But today for the first time in well over a decade it happened.  The Brent price declined while WTI did not, with WTI at $86.90 per barrel with Brent at $86.79. I am not sure what has brought this about or how long it will last, but this is something we have not seen this for a long time.

Barkley Rosser


Anonymous said...

January, 2022

Man in motion
What economist J. Barkley Rosser can teach us about how we adapt to a changing world

[ Very nice. ] said...

Well, things back to normal. WEI dropped three bucks today while Brent did not, so back to about the usual $3 gap, with Brent on top.

rsm said...

Are you prevented from repeating after me, "prices are arbitrary noise"?