On January 28th analysts finally realized that there was unrest in Egypt and crude rose $3.68 to close at $89.31. The following Monday WTI closed over $92. However, despite the continuing crisis in Egypt, the price has been moving down and closed at $87.45 today. Just prior to the the demonstrations in Egypt, there was talk about how the high levels of crude at the Cushing terminal were distorting bench mark pricing because the rest of the world did not have access to the product stored there. Of course, crude being fungible with premiums and discounts available for the extra costs to transport and refine into products, it still served as a bench mark. However, this large storage cushion, in the current Middle Eastern problem, performed the job that the Strategic Petroleum Reserve was supposed to do. It enabled the markets to take a breather and not panic. It also helped that OPEC members Saudi Arabia and Kuwait talked about increasing output should events require.
Brent continues to settle at much higher premium price than normal. The problem in Egypt is much closer to those markets but also there is no great inventory that cushions prices like the terminals in Cushing currently hold.
Today, WTI -$1.57, $87.46; Brent -56¢, $99.28; gasoline +1.45¢, $2.4498; distillate -1.29¢, $2.7937.
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