OILU - Brent-WTI Oil Spread Taking Cue From Houston-Midland?
Originally published on Feb. 14, 2019
By Erik Norland
The price spread between two relatively new futures contracts, WTI Midland and WTI Houston, has been over the past two years a leading indicator of the spread between the two most venerable crude oil futures contracts: WTI and Brent. The economics behind this might offer clues about how oil markets evolve in the future.
Before we drill down into this, first a brief history of the WTI-Brent spread, or price differential. Prior to 2011, WTI and Brent traded nearly in lockstep, with only a slight difference