WTI Benchmark Temporarily Breaks Down: Is it really a Big Deal?
The recent disconnection of WTI from the other benchmarks revived the debate on whether the WTI benchmark has been ‘broken’ and whether oil market participants should adopt an alternative benchmark that better reflects the supply demand balance in the oil market. In this article, the author discusses the reasons for the WTI disconnection and its implications on the behaviour of oil price differentials. The author concludes that despite its drawbacks, WTI will continue to serve as one of the main international benchmarks for pricing crude oil as long as market players have an interest in its survival.
Energy Economics , Finance , Oil , Oil & Middle East Programme
Arbitrage , Brent , Crude Oil , Cushing , Inventories , Pipeline , Price Differentials , Pricing Formula , The WTI Benchmark , USA , Volatility