Spread Between WTI And Brent Narrows
The gap between Brent futures and WTI futures narrowed after Brent prices slipped on news that one of Scotland's largest refineries would remain open despite rumors that it would close. Brent traded at $107.15 at 4:50 GMT on Monday morning as confidence returned to WTI.
US crude has recently been under pressure as a seasonal lack of demand coupled with domestic oil production has caused a sharp and unexpected increase in stockpiles. The Energy Information Administration surprised investors when it released a report which showed US stockpiles had jumped last week, causing WTI prices to plummet.
Oil prices have also been shouldering the burden of the US' political struggle to agree on a budget for the upcoming year. After shutting down for more than two weeks, the US government has reopened, but not without fallout from the showdown.
Economic indicators coming out of the US have shown what most were expecting, that the government's prolonged shutdown has had a negative effect on the nation's fragile recovery. Durable goods orders indicated that new orders in September fell, which many took as a signal that companies are dubious about government spending and therefore have refrained from investing.
Brent prices lost some of their support after CNBC reported that supply interruption fears in the Middle East are starting to dissipate as OPEC members attempt to export at full capacity. After months of strikes and protests which shut down several of its largest oilfields, Libya is finally returning to normal capacity.
Nigeria and Iraq are also expected to ramp up production, and maintenance in non-OPEC oilfields will soon commence, allowing the commodity to flow more freely.
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