Since the lows at the end of June, the price of oil has risen sharply. In the United States, the price of the benchmark WTI crude has risen by more than 20% from a closing low of $77.69 to today's price of $94.21. For the rest of the world, though, crude oil prices have seen an even larger advance. The price of Brent Crude oil, for example, bottomed out at $89.23 on 6/21. Since then, Brent prices have risen by more than 30% to today's level of $116.27.
As a result of the strong rally in Brent crude oil prices relative to WTI, the spread between Brent and WTI crude oil is now back above $20 and at its highest level of the year. At first glance, the fact that US oil prices are rising at a slower rate than the rest of the world sounds like a competitive advantage for the US. The problem, though, is that gasoline prices tend to be more closely correlated with Brent Crude oil prices rather than WTI, so when the Brent WTI spread widens out, it means more pain at the pump. At least the increases are coming towards the end of summer driving season rather than at the start.
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