LONDON- The Brent crude oil benchmark, used to price more than half the world's physical crude cargoes, has dropped to a new record discount to Brent oil futures at about a $10 per barrel, highlighting the overwhelming glut in world markets.
The benchmark, known as dated Brent, was just $15 a barrel on Wednesday after the Brent futures contract, a financial instrument used to trade oil prices, settled at $24.74 a barrel, according to Refinitiv data.
Different commodity pricing agencies set dated Brent but the industry typically uses the one set by S&P Global Platts.
Physical crude cargoes trade at premiums or discounts to dated Brent. With the coronavirus-driven lockdowns around the world killing refining demand, these differentials to the benchmark have crashed to unprecedented levels.
"After having traded very close to the lower end of the range over the last few days, crude futures started to move higher after U.S. President Trump expressed his confidence that Saudi Arabia and Russia will start working together on supply again soon," JBC consultancy said in an oil note.
"This drove the spread between ICE (oil futures) and Dated Brent to close to $10 per barrel, meaning the divide between the current physical reality and the hope for a better future is at a record high."
Oil traders across the world have been scrambling to sell their cargoes as far in advance as possible as rapidly vanishing demand drives key physical crude prices to multi-decade lows.
This week, Kazakh CPC Blend crude oil, for example, traded at a record $10 discount to dated Brent, meaning that a cargo sold at that differential on Wednesday would have only fetched about $5 a barrel.
(Reporting by Julia Payne. Editing by Jane Merriman) ((firstname.lastname@example.org; +44 207 542 1836;))