Key Crude Oil Benchmark Hits Record Low as Coronavirus Intensifies

A key crude oil benchmark -- dated Brent crude -- has tumbled to record lows against Brent crude futures. The difference between the two prices is now unprecedented, at more than $10 a barrel. That indicates that the market's short-term outlook for oil companies like ExxonMobil (NYSE: XOM) and Royal Dutch Shell (NYSE: RDS.A) (NYSE: RDS.B) is worse than their long-term hopes for the industry.

This comes as Brent futures have been boosted by an upcoming meeting between President Trump and oil industry leaders, and news that China plans to buy oil to fill its strategic reserves, which have given investors hope that oil prices may eventually rise. 

An oil export terminal.

Image source: Getty Images.

Dated Brent: what it means

Brent crude is the main international oil benchmark, and refers to the price of a barrel of blended light sweet North Sea crude oil. Dated Brent refers specifically to the trading price for a barrel of Brent crude with a delivery date of between 10 days and one month in the future. This is different from the Brent crude futures price, which is the trading price for a barrel of Brent crude with a delivery date of up to nine years in the future. 

In other words, dated Brent reflects the market's very near-term outlook for oil prices, while Brent futures reflect a longer-term outlook.

After the market closed on Wednesday, the dated Brent price was pegged at $15.14 a barrel, while Brent futures settled to $24.74 a barrel. This morning, Brent futures rose 13%, bringing the differential between Brent futures and dated Brent into double-digit territory, although that may ease by the time dated Brent prices are calculated after market close today. 

In the year leading up to March 2020, dated Brent hadn't traded more than $1.50/barrel below the Brent futures price. 

10 stocks we like better than ExxonMobil
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and ExxonMobil wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks


*Stock Advisor returns as of March 18, 2020


John Bromels has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.