Crude Summit: WTI to 'subsume' Brent once integrated

The inclusion of US benchmark crude WTI into the Brent complex draws closer, and the impact to that market is likely to be "huge" by boosting the physical volume into Europe's benchmark.

"It's really WTI setting this marginal price for light sweet crude in Europe," said Argus' vice-president of business development James Gooder today at the Argus Americas Crude Summit in Houston, Texas.

The market opted to include WTI, over Norwegian grade Johan Sverdrup, into Brent, but the light sweet US grade is poised to become the most important part of the crude basket.

"It's more a case of WTI absorbing Brent," said Gooder. "Overtaking and subsuming Brent into itself."

The change for Argus' Dated Brent assessment is set to start for June-delivery cargoes, which would start trading in May.

US crude exports are at a record high, much of which is made up of WTI quality crude, and it is possible the US Gulf coast may be where much of the price discovery for Brent ends up happening.

Even so, the way Brent is traded is having a bearing on how WTI is assessed in the US Gulf coast, most recently to reflect the price changes of cargoes throughout the month.

"We didn't really have cargoes with dates attached at the US Gulf Coast, but that's starting to happen now," said Gooder. "Hence we're able to have these individual intra-month decade assessments."

The Argus Americas Crude Summit will continue on Thursday and Friday. Former president George W Bush will take part in a closed-door fireside chat with in-person attendees Thursday morning. Other keynote speakers include Phillips 66 chief executive Mark Lashier and Mercuria co-founder Daniel Jaeggi, who will discuss shifting supply and demand issues, the current and expected impact of trade sanctions and the lifting of Covid-19 restrictions.

The full agenda is available here.

By Brett Holmes