What is the difference between Brent crude oil and WTI crude oil futures?

In terms of production, the oil produced by the United States is a substitute for other countries. And geographically, it's safe to hedge against WTI prices, not Brent crude.

Hastings made the comments when the spread of crude oil futures was less than $1 in July. "Brent crude, in turn, reflects global macroeconomic weakness, which has little significance in pricing West Texas Intermediate," he explained One

WTI (West Texas Intermediate), North Sea Brent and OPEC benchmarks.

What are the main differences between these crude oil futures contracts?

Sulfur content: some crude oils are easier to refine into gasoline than others, and they cost less. Low sulfur crude oil is also called low sulfur crude oil. The commonly used method of sulfur content measurement is API gravity, which is a method to measure the weight or weight of petroleum liquid and water. If the API gravity is greater than 10, it will be lighter and float on the water surface; if it is less than 10, it will be heavier and sink. API is the American Petroleum Institute.

The API gravity of WTI crude oil is about 39.6.

The API specific gravity of Brent crude oil is about 38.06.

Among the OPEC oil baskets, those from seven countries are the most acidic. Currently, the API weight is 32.7, which is the heavier basket.

Location: Brent blended crude oil is a mixture of crude oils from 15 oil fields in the North Sea. It's not as "light" and "sweet" as WTI, but it's still great for making gasoline. It is mainly refined in northwest Europe and is the main benchmark for other crude oils in Europe or Africa. For example, the prices of other crude oils from these two continents often differ from those of Brent. Brent crude oil price fell 0.50 US dollars. The price of crude oil is usually about $1-4 higher than that of crude oil in OPEC.

WTI, also known as light and low sulfur crude oil, is mainly distributed in Permian oil fields.

The OPEC basket of oil prices is the average of Algeria, Indonesia, Nigeria, Saudi Arabia, Dubai, Venezuela and Mexico. OPEC uses the price of this basket of currencies to monitor global oil market conditions. The reason why the oil price of the organization of Petroleum Exporting Countries (OPEC) is lower is that some countries have higher sulfur content, which makes them more "acid", so they are less useful in the production of gasoline.

Marketing: as WTI is affected by domestic macro-economy, while Brent and OPEC are affected by global macro-economy, there is a dynamic relationship between them.

The narrowing of the price differential between West Texas Intermediate crude oil and Brent crude oil is supported by the following factors:

Brent (North Sea) crude oil prices fell as the increase in us light and low sulfur crude oil production replaced imports of high-quality Brent crude oil into North America, reducing demand for high-quality Brent crude oil.

Raise the price of West Texas Intermediate (Cushing, Oklahoma) as infrastructure constraints to reduce West Texas Intermediate prices are being reduced

According to the U.S. energy information administration, the strength of WTI relative to Brent crude oil in the first half of 2013 can be attributed to the following factors

New crude oil transportation infrastructure in the United States is online. In early 2013, several new crude oil transportation projects were launched, including crude oil terminals near pipelines and railways. This new infrastructure has helped to solve the traffic bottlenecks in the central United States, especially near Cushing, Oklahoma, which has driven up the price of West Texas Intermediate oil.

American refineries have a high operating rate. Since the beginning of March, crude oil supply to refineries has grown steadily, reaching a record high. In the week ending July 5, US crude oil production was 16.1 million barrels a day, the highest since 2007, helping to push up the price of WTI in the spring and summer of 2013.

American refineries obtained domestic light and low sulfur crude oil. The expanded crude oil transportation infrastructure has increased the access of refineries to domestic produced crude oil. As the quality of some domestic light and low sulfur crude oil is similar to that of Brent crude oil, some light and low sulfur crude oil from American refineries has replaced the import of Brent crude oil and similar Brent crude oil, which has brought downward pressure on the price of Brent crude oil.

When it comes to online commodity trading, traders should understand the academic differences highlighted above, choose the oil futures suitable for themselves, or use the price difference between two crude oil futures contracts to study crude oil futures trading.

Futures trading, futures option trading and over-the-counter foreign exchange retail trading all have huge loss risk, which is not suitable for all investors. Past performance does not represent future results. Based on your situation, knowledge and financial resources, you should carefully consider whether the transaction is suitable for you. You may lose all or more of your initial investment. Opinions, market data and recommendations are subject to change.

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