HardAssetsInvestor

Written by Sumit Roy  |

November 23, 2011

Crude Oil Report: Inventory Deficit Grows, But Brent May Fall To $100 On Eurozone Crisis

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U.S. crude oil production was little changed near eight-year highs at 5.887 mmbbl/d. Output has rising swiftly thanks to surging production in unconventional oil plays. Year-to-date output is up 2.4 percent year-over-year.

Inventories at the NYMEX delivery point in Cushing, Okla., were essentially unchanged at 32 million barrels, or 55 percent of the EIA’s estimate of capacity. Overall Midwest inventories were also essentially unchanged at 91.5 million barrels, or 73 percent of estimated storage capacity.

Front-month WTI calendar spreads moved into slight contango at -$0.12.

Front-month Brent calendar spreads narrowed slightly from +0.38 to +0.33, but still remain in mild backwardation.

West Texas Intermediate’s discount to Brent rose week-over-week to -$11.47 from -$9.28. Last week the spread briefly hit the narrowest levels in eight months at -$7.90 on news that the Seaway pipeline will be reversed. WTI’s discount to Louisiana Light Sweet fell to -$11 from-$12 last week.