I thought oil was supposed to be fungible, so I was curious as to why a barrel of Brent could be selling in the low $100s while WTI was around $85/barrel. That sixteen dollar spread is some sort of record.

Fungible refers to a commodity that is easily exchanged or substituted for other units of the same commodity - like currency. Because of cut and color, diamonds are not exactly fungible with other diamonds, but wheat is generally wheat, and I thought light sweet oil was generally light sweet oil. But it isn't.

WTI is named after West Texas and comes from the US Midwest and Gulf regions. Brent crude comes from the North Sea and is named after the Brent goose. WTI is apparently lighter and sweeter than Brent, thus cheaper to refine, which explains why it has generally cost a little bit more than Brent.

The above chart shows how much cheaper Brent crude oil has been than West Texas Intermediate crude oil - generally two or three dollars a barrel - until 2007 when Brent briefly surpassed WTI, then again in 2009. Observers called those events anomalies due to unusually large stockpiles of crude in Cushing OK. Since Autumn 2010, however, Brent has continued to cost significantly more than WTI.

Some blame oil depletion in the North Sea. Others blame depressed demand in the US vs high demand in Asia. No one knows, of course, but ASPO's Tom Whipple has his theories:

Some of the pressure on NY prices can be explained by a weaker euro, and the increase in US stockpiles that was reported on Wednesday. While US crude increased by 1.9 million barrels, US gasoline inventories grew by 4.6 million barrels to 240 million, the highest level since March 1990. Upward pressure on Brent crude can be partially explained by lower production from the North Sea this winter and increased demand for distillates because of the colder winter. ...

The major reason behind the London-NY price differential, however, seems to be the perception of how events will develop post-Mubarak. Comments from many American oil traders suggest that the resignation has put the Middle East uprising away for now so that markets can focus on stockpiles, while the London markets are concerned that more unrest, possibly in oil producing states such as Algeria, is in the offing.