LONDON: A cocktail of factors, including ample US crude stockpiles, unrest in the Middle East and North Africa and keen Asian demand, has caused benchmark oil prices to trade more than $20 apart, the biggest ever gap.
Last week, a barrel of Brent crude oil struck a record premium of $22.79 against the price of New York crude, or West Texas Intermediate (WTI).
New York prices have mostly been weighed down by plentiful crude supplies in the key transit hub of Cushing, Oklahoma, in the United States -- which is the world's biggest global oil consuming nation.
However, London Brent oil has found solid support from mounting supply concerns on the back of violent unrest in Libya and Nigeria, alongside falling North Sea production.
"The current very high Brent prices reflect rising geopolitical risk and possible tensions on world supply/demand balances in the future," said Credit Agricole CIB analyst Christophe Barret.
"WTI, more dependent on US mid-continent balances ... should remain largely isolated from the tightening in world crude markets," he added.
Brent oil on Tuesday topped $121 on the back of upbeat economic data while New York crude languished almost $23 behind.
Analyst Damien Cox, at consultancy EnergyQuote JHA, agreed that the gap existed because of the different supply pictures.
"The spread between Brent crude and WTI has moved to very wide levels which reflect the differing fundamentals of the two markets," Cox told AFP.
Copyright APP (Associated Press of Pakistan), 2011
Copyright AFP (Agence France-Presse), 2011
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