LONDON Reuters The price gap between the worlds two most actively traded oil contracts narrowed to its lowest in more than seven months, demonstrating that U.S. oil output is still in the COVID19 doldrums with the market likely to remain undersupplied.
North Sea Brent futures traded at a premium of 1.89 to U.S. West Texas Intermediate WTI on Friday, its narrowest since Nov. 11.
Title BrentWTI spread,
We believe that the recent narrowing of the WTIBrent price spread … is noteworthy, with North America taking the mantle from Chinese demand or OPEC cuts and disruptions in tightening the global oil market, Goldman Sachs said in an analysis.
At the same time a quick COVID19 vaccine rollout in the United States has revived the economy there while U.S. shale oil companies have held off from a rapid ramping up of output and appear to be holding out for higher oil prices and returns.
Local demand is rebounding sharply while shale producers remain disciplined, with the U.S. and Canada set to deliver this summer a net reduction in crude exports to the global market larger than Saudis unilateral cut earlier this year, the bank added.
Earlier in the pandemic a relatively quicker Chinese recovery contained some of the demand destruction across the globe while fast action by the Organization of the Petroleum Exporting Countries OPEC and allies such as Russia helped to rein in output to match depressed consumption.
The producer group has been briefed by industry experts…