As you've probably found it's pretty hard to get good info on this spread, so you really have to enjoy Googling...
Also, I'm more than a little hesitant to provide any kind of trading advice to anyone without seeing how they trade, what their strengths and weaknesses are, etc. What works for me might not for someone else.
That said, I personally try to figure out what forces are moving the oil markets and how that should affect the spread. For example Mideast political tensions should *generally* push harder on Brent. If, as is often the case, this appears to be a short-term overreaction to a political event then it can be possible to look for the move to end and then trade the reversal...
US gasoline demand numbers might push harder on WTI, although not always. There are questions also about the storage situation at Cushing for WTI and this can have a dramatic effect. I'm not sure if investment flows should affect one more than the other... Asian demand will tend to pull up Brent more, and you can see this at least on Dorman by checking the price of Oman or Dubai crude -- if it's at a premium at all (it's a lower grade, sour crude) then you'd expect to see Brent high relative to WTI since Oman and Brent are more commonly used in Asia (and Europe). WTI ends up being guzzled in the US and can be a proxy for other crudes headed toward America.
Brent is often shipped to the States (when it's higher than WTI + shipping costs), but WTI stays Stateside. You can get a very loose idea of shipping cost trends by looking at the Baltic Dry Index -- though it's not a rate for seaborne oil delivery.
So, if a hurricane looks ready to knock out US production, what do you think that will do to the spread?
You also can look to the deferred months to get an idea of what's happening. Is WTI in strong contango but not Brent? That kind of thing... You'll eventually want to really wrap your head around this stuff.
I tend to find this spread has a good momentum to it, so moves take a few days for example. Some simple tech indicators like MACD and RSI can provide insight, but use with care!
To chart, on the Dec 09 futures you can go to my.futuresource.com, sign up, and in a chart window enter:
= 'WBS 9Z-ICE' - 'BRN 9Z-ICE'
This will give you a delayed line chart. As a line chart, you can't really trust it that much (only shows the close, not hloc).
Always remember that Brent expires before WTI! Also remember that you may anticipate a move, but if that move doesn't need to happen as much in the back months then even rolling a position may not help as you'd expected (since the disparity in prices may have mainly been in the front months, for example). Not sure I'm explaining this right... but it could happen in our hurricane forecast, for instance. A big move higher in the front-month spread, and it never has to reverse, the contracts just have to expire... Currently the Jan spread is 6 cents under the Dec spread, as an example. Sometimes you may consider diagonal spreads, for example +Dec09WTI -Jan10Brent, esp since Brent expires first and also takes time to ship... Of course this brings its own considerations...
I'm not an expert! More of a jack of all trades preferring diversification over specialization, so maybe someone with some deep knowledge here can chime in.
For books, I recommend Oil 101 by Morgan Downey.
A few links:
http://www.futuresmag.com/Issues/2009/4/Pages/Trading-the-WTI-Brent-spread.aspx
http://www.towersperrin.com/tp/getwebcachedoc?webc=USA/2009/200908/EnergyRiskWTIBrent20090520.pdf
http://tonto.eia.doe.gov/ask/crude_types1.html
http://www.hardassetsinvestor.com/c...normalizing.html?year=2009&month=02&Itemid=39
http://www.risk.net/energy-risk/news/1511604/analysts-question-wti-brent-spread
http://www.reuters.com/article/GCA-Oil/idUSTRE50T4IG20090130?pageNumber=1&virtualBrandChannel=0
http://www.mees.com/postedarticles/oped/v50n38-5OD01.htm
http://www.google.com/search?hl=en&...&q=atlantic+arbitrage+wti-brent&start=40&sa=N
OK that should be enough for now.
Personally I think you may be better off continuing to trade as you do now, since it seems to be working, and read up and immerse yourself in oil fundamentals without really looking for actionable intelligence per se. Always remember that there are people who know this trade inside and out. If your technical or "naive" approach works and you're covering your butt/understand downside risks, then why complicate things too much since you'll never know more than big fundamental traders with far superior information.
Also, the WTI-Brent spread (as well as Oman etc) can provide valuable perspective about what is happening in oil and other markets.
Oh, overall I'd have to say that WTI is more volatile than Brent, but you should, above all, look and think for yourself, right?
What I personally like about this spread is the momentum and tendency toward mean reversions.
Hope this helps.
