U.S. crude discount to Brent widens on Trump tax talk, OPEC
U.S. oil prices hit their biggest discount to global benchmark Brent crude in five months on Tuesday as President-elect Donald Trump said an oil import tax plan would be too complex and as a global deal to reduce supply hits Middle East output.
The deeper the discount, the easier it is for U.S. crude producers to export oil to refiners worldwide. A glut in global supply had limited the appetite for crude from the United States until late last year, even after the United States had lifted a long-standing ban on exports.
The spread between U.S. West Texas Intermediate (WTI) and Brent is widening enough to open the window for exports for some U.S. crude grades, said Dominick Chirichella, senior partner at the Energy Management Institute in New York.
It was already wide enough in December for traders and major producers to line up a flotilla of carriers to ship more oil to Asia than in nearly two decades.
A proposal spearheaded by U.S. House of Representatives Speaker Paul Ryan to boost jobs and the economy by taxing crude imports and exempting exports has fueled expectations for tighter supply into the United States and bolstered WTI.
Written by Devika Krishna Kumar