Friday, November 4, 2011

WTI / Brent

With the official announcement of the re weighting of the SP GSCI Index, it might be timely to take another look at WTI/ Brent spread.

From the Sept 6 post, Brent vs WTI when the spread was -26.50
"Given the set up with a -3- of 3 coming up, Brent could well see a lot of that premium to WTI go bye bye.
I'm thinking the Nov contract. Maybe the terrible conditions in Europe motivate maintenance in the North Sea, maybe QE III ain't what it used to be."

 Here's the current chart from Reuters;
click to enlarge

The re weighting is as follows,

* Brent weight rises to 17.35 pct vs 15.9 pct
* WTI weight cut to 30.25 pct vs 32.6 pct
Apparently it was widely expected and announced last night.

The 50% retrace of the last leg up is around -20.

Longer term plenty of room to come in.
from Bloomberg;

 -10/-11 looks like resistance, also roughly a 50% retrace.




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