Gap Between US and Brent Widens
The gap between US oil and European Brent crude grew to its largest in almost four months on Tuesday as seasonal maintenance in the US along with pipeline outages cut down on crude demand and caused an increase in stockpiles.
Recent data showed that crude stockpiles in Cushing, Oklahoma were on the rise, causing many investors to ditch WTI and opt for Brent futures. Brent crude oil traded at $109.74 at 6:00 GMT on Wednesday morning as Federal Reserve taper talk stole the spotlight once again.
The US government shutdown gave investors reason to believe that the Federal Reserve would maintain its easy money policies at least until the nation's budget issues were worked out in early 2014. Nonfarm payrolls data for September, which was released nearly two weeks late due to the shutdown, added to the growing case for the bank to continue with its $85 billion per month bond buying plan. The payrolls data showed that US employers added just 148,000 jobs in September, a significant amount less than expected.
US crude markets have been under pressure recently as seasonal maintenance and rising domestic production have left the nation over supplied. The Energy Information Administration is set to report crude inventory data at 10:30 GMT on Wednesday, which could push US oil prices even lower. According to Reuters, analysts believe crude inventories increased again last week.
Brent also found support from geopolitical tension in Northern Africa as the Libyan government attempted to resolve the labor issues that cut the nation's oil output in half just weeks ago. The nation has resumed production to around 600,000 barrels per day, but government has its work cut out to end the ongoing labor protests that shut down several of the nation's largest oilfields.
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