May 2014 – Brent vs. WTI Forward Curve Analysis with ZEMA


NYMEX Crude Forward Curve (May 2014)

On the New York Mercantile Exchange (NYMEX), futures contracts for crude oil benchmarks moved in opposite directions in May 2014. This month, the NYMEX Brent forward curve for delivery by the end of May 2016 (represented by the blue line in the graph above) slightly decreased by $1 USD/Bbl to $102 USD/Bbl. On the other hand, Texas Light Sweet in May (the red line in the graph above) averaged just above $92 USD/Bbl for the same delivery period. Brent stayed at $10 USD/Bbl (the light blue area in the graph) premium to WTI on average for the next two years.

For the second month in a row, WTI averaged around $92 USD/Bbl for delivery over the next 24 months. Although HSBC and Markit’s PMI reading for China in May 2014 exceeded the median estimate of market analysts, the downside is that this prediction makes any stimulus package less likely to be developed.[1] A data point such as this will preserve the status quo, as the market requires a stronger indication before becoming bearish or bullish.

Brent forward prices dropped as worries over the Ukraine eased for the time being. After the Ukraine’s presidential election on May 25, exit polls revealed a decisive victory for pro-European candidate Petro Poroshenko. Russian President Vladimir Putin pledged to respect the results of the Ukrainian election, and Poroshenko vowed to restore order in the country.[2]



[1] Grant Smith, “Brent Trades Near 11-Week High on China Factory Data; WTI Steady.”

[2] Investing.com, “WTI Oil Falls From 5-Week High after U.S. Data,” NASDAQ OMX, Accessed June 3, 2014, http://www.nasdaq.com/article/wti-oil-falls-from-5-week-high-after-us-data-cm356504.

Data Sources: CME


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