The spread between Brent crude and West Texas Intermediate (WTI) prices hit its widest level in more than three years on Monday, with WTI down more than $8 against Brent as demand of US gasoline falls. Brent crude was trading at $104.8 as of 11:41 EST Monday, while WTI was trading at $96.12, representing a spread of more than $8 per barrel.
Brent prices continue to rise on tight physical supplies, driven by Russia’s war on Ukraine and Western sanctions, as well as the European Union’s looming ban on Russian oil that will take effect before the end of this year .
In the United States, WTI is being pressured lower by reduced demand for gasoline, although prices at the pump are slowly easing.
Gasoline prices in the US have fallen steadily over the past week. On Monday, the national average per gallon was $4.355, according to AAA, down from $4.521 a week ago, and analysts are predicting prices below $4 in the near future.
Gasoline demand saw only a slight increase last week, while US crude inventories saw a large increase of 3.5 million barrels due to weak demand. Last week’s EIA inventory data showed that while demand for gasoline increased during the week, it was still lower than this time last year. At the same time, total domestic gasoline stocks increased.
In a note cited by Reuters, OANDA market analyst Jeffrey Halley said that while Brent is outperforming due to tight physical markets, “WTI, on the other hand, is a domestic benchmark, the which means that the nerves of the US recession seem to be weighing more heavily on its price. “.
Meanwhile, analysts expect the Federal Reserve to raise interest rates on Wednesday by three-quarters of a percentage point after June consumer prices rose 1.3%, bringing 12-month inflation to a more than four-decade high of 9.1% in large part. due to the price of goods.
By Tom Kool for Oilprice.com
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