The gap between US oil benchmark West Texas Intermediate and global benchmark Brent has been narrowing over the past several weeks, and is trending back towards historical norms, says Energy Management Institute’s Dominick Chirichella in a report, Brent-WTI Crude Spread on a Path Toward Normalcy.

“The spread has been trading in an atypical relationship, with Brent trading at a premium to the slightly better-quality WTI for the last several years. Over the last week or so, the spread has narrowed to a level that suggests the period of extreme widening moves may be over.”

Chirichella cites the crude oil revolution in the US and Canada as the primary driver of the wider spread between the two benchmarks, and notes that the revolution’s second phase – “the oil infrastructure revolution” – is helping to ease constraints that had kept much of this supply from reaching coastal markets.

“All of a sudden crude oil is not as landlocked as it was in the Midwest and crude oil inventories are finally starting to destock off record high levels,” he says. “Further contributing to the strong narrowing trend has been the robust and relatively consistent production coming from the North Sea, along with minimal, if any, interruptions in other global crude oil.”