When refiners purchase a Brent contract, they have a strong idea of how good the oil will be and where it will come from. Today, much of the global trading takes place on the futures market, with each contract tied to a certain category of oil. Open a newspaper and there’s a good chance you’ll find a news story about the price of oil going in one direction or the other. As such, there are a few different classifications of crude oil, each that serves as a different financial benchmark for the substance. Crude oil flows “inbound to Cushing from all directions and outbound through dozens of pipelines”.16 It is in Payne County, Oklahoma, United States. Brent is traded at higher prices, serving as a global benchmark covering a larger geographic area.

1. A “basket” product consisting of crude from Dubai, Oman, and Upper Zakum, it’s somewhat heavier and has higher sulfur content, putting it in the “sour” category.
2. WTI investing can be a way for investors to gain exposure to the oil market and potentially profit from changes in oil prices.
3. For the purposes of trading on futures exchanges in London or New York, however, reference oils are used.
4. The solution came in the form of crude oil futures, which are tied to a specific benchmark crude.
5. There has been a trend, due to advancements in oil drilling and fracking, of West Texas Intermediate becoming cheaper than Brent Crude oil.

Historical Prices for Oil (WTI)

Crude oil stockpiles in the United States for the week ending November 15 increased by 0.545 million barrels, compared to a rise of 2.089 million barrels in the previous week. The market consensus estimated that stocks would increase by 0.400 million barrels. Weak Chinese demand contributes to the WTI’s downside as China is the world’s largest crude importer.

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We talked about the production boom taking place in North Dakota previously. Both Brent Crude and WTI are light and sweet, making them ideal for refining into gasoline. West Texas Intermediate plays an important role in managing risk in the energy sector worldwide as it has high liquidity, a large number of customers, and a lot of transparency. Furthermore, transporting WTI overseas to Brent crude’s market can be costly, making it difficult for WTI to compete with Brent crude in terms of pricing.

In 2023, the U.S. imported about 8.51 million barrels per day of petroleum products from 86 countries. The same year, it exported about 10.15 million barrels of petroleum to 173 countries and three U.S. territories. Since the shale boom in the U.S., which resulted in a production increase of WTI, the price of WTI has gone down and usually trades at a discount to Brent. Brent is also tied to more worldwide oil markets, meaning that more factors are influencing its price. WTI is the underlying commodity of the New York Mercantile Exchange’s (NYMEX) oil futures contract. You see, WTI crude has an API gravity of 39.6 and only contains approximately 0.24% sulfur (in order to be considered “sweet,” the oil has to have less than 0.5% sulfur).

Additionally, their sulfur content is different, which determines if one is sweeter than the other. WTI has less sulfur than Brent, making it sweeter, and, therefore, easier to refine. However, not all futures or options tied to a crude benchmark are used for hedging purposes.

Brent Crude vs. West Texas Intermediate (WTI): The Differences

There are three such benchmarks, and the other two are Brent crude and Dubai. As a result, there are many oil prices; thus, one must indicate which benchmark they’re referring to if they want to know the “price of oil.” Because of these gbp to nzd exchange rate today factors, buyers of crude oil—along with speculators—need an easy way to value the commodity based on its quality and location.

Crude Oil Prices: West Texas Intermediate (WTI) – Cushing, Oklahoma (DCOILWTICO)

At the end of 2010 the price difference between the two benchmarks widened, and then narrowed at the end of 2013. WTI only contains 0.24% sulfur and has an API gravity of approximately 39.6. The oil is primarily refined in the Gulf Coast and Midwest areas of the United States. Both benchmark oils are considered sweet, but WTI is sweeter, making it a bit easier to refine. The hub has 90 million barrels of storage capacity and accounts for 13% of U.S. oil storage. “These risks to supply are definitely keeping the support here and offsetting to a degree concerns around the global demand outlook,” said John Kilduff, partner at Again Capital in New York.

The reference oil traded most frequently and of major significance for the USA is West Texas Intermediate (WTI), while the most important in Asia is Dubai Fateh. Other reference oil types include Leona, Tijuana, Alaska North Slope, Zueitina or Urals. ] local trade 3 ways to start investing in the stock market with $100 or less between oilfield production and refineries around Midland, Texas, and Cushing, Oklahoma, could be said