Brent-WTI spread hits two year high

The Brent-WTI differential remains wide at around $6 per barrel, its widest level since prior to the crude export ban lifting in late 2015. It increased sharply when Hurricane Harvey hit the crucial energy hub of Houston in late August and went as high as a settle of $7.11 per barrel on 8 September 2017. Hurricane Harvey forced the shut down of approximately 4.5 million b/d of refining capacity in Texas at the height of the storm, and while capacity is slowly coming back online, we expect it to take weeks for crude runs to normalize. On the other side of the equation, recently Brent has been supported by the rebalancing in the global supply and demand dynamics since the spring. Wood Mackenzie's Macro Oils Service shows a tightening in the market starting in Q2 2017. Partly this is due to the impact of the OPEC/non-OPEC production agreement but also the strong oil demand growth seen in 2017.