LIVE MARKETS-Oil 'widow maker' gets a nudge from Venezuela

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OIL 'WIDOW MAKER' GETS A NUDGE FROM VENEZUELA

Stocks are getting a decent bounce today, but much of that momentum is less about super-positive sentiment in equities and more about the surge in the oil price on the back of U.S. President Donald Trump ordering "a total and complete" blockade of all sanctioned oil tankers entering and leaving Venezuela.

The energy-heavy FTSE 100 .FTSE is leading the charge, up 1.4%, as shares in the likes of global producers like BP BP.L, Shell SHEL.L rattle towards the top of the index. Brent crude LCOc1 is up around 1.8%, the most since mid November.

But given where the political hot spot is, geographically, WTI CLc1 is getting a bigger boost, up 1.9%, which briefly brought its discount to Brent to the narrowest in four months.

This actually reduces the incentive for European buyers to take U.S. crude, rather than Atlantic basin oil, particularly once taking into account shipping costs, which could well head higher as a result of the Venezuela blockade.

The so-called Brent/WTI arbitrage, in addition to determining the profitability of shipping crude from one side of the Atlantic to another, is a popular play among oil traders. That spread, once known as "the widow-maker" of the energy world, is volatile in nature, but has mostly been trending lower as the volume of U.S. exports has increased.

The United States produces some 13 million barrels a day and sells around 4 million bpd of them to overseas customers. European buyers accounted for about a third of this total in 2024, so regional refineries tend to be sensitive to moves in the arb.

(Amanda Cooper)

EARLIER ON LIVE MARKETS:

EUROPEAN SHARES INCH UP, FTSE LEADS THE WAY CLICK HERE

EUROPE BEFORE THE BELL: FUTURES TICK HIGHER CLICK HERE

UK INFLATION FINAL HURDLE BEFORE BOE VERDICT CLICK HERE