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London could be overtaking New York in importance for global oil trading, with volume of North...

London could be overtaking New York in importance for global oil trading, with volume of North Sea Brent crude exceeding that of WTI on NYMEX for the first time ever in Q2. Brent responds more to global geopolitics such as in the Middle East and North Africa, says ETF Securities' Martin Arnold, while U.S. grade reflects domestic factors more.
Comments (2)
  • Aristiphones
    , contributor
    Comments (1327) | Send Message
     
    how is this possible? if the oil volume is more you would think the price would be lower not higher. the USA on the other hand is by far the largest consumer of oil on the planet...and that's just the consumer. Throw in the government and you're talking massive amounts cash flow. my guess is there are distribution issues of energy in the rest of the world that simply don't exist in the USA and that explains the higher price "over there." not a good trading strategy as that is something that can be easily fixed by an MLP in the USA travelling over there to fix that problem.
    2 Aug 2012, 06:14 AM Reply Like
  • sr1977
    , contributor
    Comments (319) | Send Message
     
    The USA might be the largest single consumer of oil, but it's consumption is not larger than the combined markets served by Brent. Brent tends to have a larger risk premium and is the preferred oil contract in the fast growing SE Asia area as well.

     

    The distribution issues you speak of apply more to WTI than Brent, as much of WTI is land-locked and can't be shipped internationally. This also leads to a glut of oil in Cushing when the USA economy is soft and demand is down, suppressing the price of WTI over Brent.
    2 Aug 2012, 06:45 AM Reply Like
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