WTI-Brent Spread Hits 3-Wk High After Surprise US Oil Stock Build
July 1 (Reuters) - U.S. crude oil futures' discount to Brent, one of the biggest plays in oil, widened to more than $5 a barrel for the first time in three weeks on Wednesday after U.S. government data showed a surprise inventory build.
Crude stockpiles in the United States rose 2.4 million barrels last week, the first weekly rise since April, after analysts in a Reuters poll had forecast a 2 million-barrel draw.
Inventories at the Cushing, Oklahoma delivery point for U.S. futures, also known as West Texas Intermediate (WTI), rose 123,000 barrels, another unexpected build.
"The bottom line is the overall U.S. stock build is weighing on heavily on WTI, and the Cushing build is adding to that," said Tariq Zahir, an oil trader and managing member at Tyche Capital Advisors in Laurel Hollow, New York.
One of the most popular trades betting on the volatile fluctuations between the North Sea's Brent and the U.S. benchmark, the spread has seen intense action in recent months as the WTI's discount swung from below $2 in January to above $13 in March, before narrowing again.
On Wednesday, U.S. crude's front-month settled down $2.51 at $56.96 a barrel. Brent finished $1.58 lower at $62.01.
That pushed the spread <CL-LCO1=R> to above $5, the widest gap since June 10.
Aside from the U.S. stockpile build, short-covering in Brent, after Iran's delayed efforts to clinch a nuclear deal with the West, could have contributed to the spread's widening, some traders said.
As a norm, WTI reacts more on U.S. oil fundamentals, while Brent, the more widely used benchmark, is more sensitive to global events.
Iran resumed talks with six world powers in Vienna on Wednesday, extending a June 30 deadline for a nuclear accord by a week. The deal is key to lifting Western sanctions on Iranian crude exports that will allow Tehran to flood the market with more supply.
"There may have been some who got short (on) Brent based on expectations of an Iran deal. When that was delayed, that may have brought some buyers back into Brent," said David Thompson, executive vice president at Powerhouse, an energy-focused commodities broker in Washington.
(Reporting By Barani Krishnan; Editing by Marguerita Choy and Richard Chang)
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