SINGAPORE: US shale oil is deepening the discount of US crude prices to global benchmarks, with the price gap turning into the de facto indicator of the health of American shale supply, a shale spread of sorts.

The gap between West Texas Intermediate (WTI) and Brent expanded to its biggest in a year at almost $12 a barrel as US oil stocks hit records while global demand supported Brent. The surging US production and inventories point to an "oversupplied market which is hard to ignore," ANZ Bank said in a report on Friday.

Prior to the rise of US shale oil production more than half a decade ago, the spread between WTI and Brent had moved very little for 20 years, largely hovering around zero.

The emerging US glut has since weighed on WTI, which is increasingly a more domestic price gauge than a global one, while non-US benchmarks rise up and down according to demand from Asia and geopolitics in the Middle East.

One factor that could narrow the spread would be a dramatic cutback in shale production as weaker crude prices challenge the economics of shale oil. The spread could shrink further if, or when, the United States adds to world supply with crude exports, which are banned for reasons of protecting national resources for domestic consumption.