Everyone seems to be talking about the Brent-WTI spread in oil right now, which is surging. Brent oil is currently more than 15% above WTI oil.
Spreads of this magnitude are uncommon. Here are the historical cases in which the Brent-WTI spread was >15% of WTI’s $ (i.e. very wide spreads), and what happened next to the price of WTI crude oil.
Click here to download the data in Excel.
Look at WTI oil’s 1 week forward return and 3 month forward return, which are both positive 82% of the time. This study suggests that oil’s short-medium term outlook has a bullish bias right now.