The havoc initially wreaked by Hurricane Harvey and set to be further exacerbated in the near future by other extreme weather episodes has taken its toll on the oil market with the spread between WTI and Brent prices gapping out to its widest level since May 2015.
The availability of West Texas Intermediate (WTI) crude oil has been severely compromised by recent weather patterns, due to the latter's destructive effect on the U.S. Gulf Coast refining system. In order to compensate for this shortfall, Brent oil refiners (who produce the commodity overseas) have been forced to step up, Miswin Mahesh, oil analyst at Energy Aspects told CNBC on Wednesday.
"It's been a very fluid situation on the Gulf coast…so it has been bearish WTI but we've been saying it's been constructive Brent and global greats," explained Mahesh, saying the result has been for European refineries to bid for Brent and for Dubai-linked crudes as well.
While acknowledging that there is an argument to be made that oil demand along the Gulf Coast has also been hit by the spate of hurricanes, Mahesh does see an easing of current conditions ahead.
"Give it a few weeks, once the dust settles, we will continue to see balances get constructive," he predicted.