Narrow price differential between Brent and WTI

Speculators in particular appear to see the decline in US production as a good enough reason to price in a relatively sharper tightening on the US market. Whereas net long positions on the NYMEX had risen for the fifth consecutive week as per 15 September and as such were 75% higher than they were in mid-August, speculative net long positions on the ICE fell last week, they are only just shy of 15% higher than in mid-August. 

Whether the prices will further converge in the near future, or whether WTI will even become more expensive than Brent, will depend to a major extent on the US inventory trends, of which the American Petroleum Institute will provide an initial indication after close of trading today.

However, even if speculators are focusing on the decrease in US production at present, it is important not to forget that US crude oil stocks are still currently 28% or just under 100 million barrels higher than usual, suspects Commerzbank. In other words, it will take time for them to fall back to normal levels despite the drop in US production.