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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. West Texas Intermediate (WTI) is a trading classification xor neural network of crude oil and one of the most commonly used benchmarks in oil prices.
The Battle of the Benchmarks: Brent vs. WTI
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You can also trade shares via spread bets and CFDs, enabling you to go long or short on underlying prices. There are different ways to trade Brent crude and WTI, depending on your preferences. One of the most common ways to buy and sell oil is via futures, but there are also other ways to get exposure to the commodity.
An example of this would be the Arab Spring in 2011, which sparked fears of reduced Brent crude supply. The spot price reached $126.65 in April that year, while WTI was priced at $112.79. American Petroleum Institute (API) gravity refers to the density of the oil – measured on a scale from ten to 70. Light sweet oils flow more freely at room temperature, making them easier and cheaper to review the only investment guide you’ll ever need refine. Light Sweet Crude Oil futures and options, in particular West Texas Intermediate futures, are the most actively traded energy product in the world.
Unit conversion for Oil (Brent) Price Today
At the time, our domestic production was flowing at a rate of 8.6 million barrels per day, with approximately 30% of that oil coming from Texas. Brent is the reference for about 80% of the oil traded around the world, with WTI the dominant benchmark in the U.S. and Dubai influential in the Asian market. WTI refers to oil extracted from wells in the U.S. and sent via pipeline to Cushing, Oklahoma. The fact that supplies are land-locked is one of the drawbacks to West Texas crude as it’s relatively expensive to ship to certain parts of the globe.
WTI recovers above $68.50 on a large surprise crude draw
The Saudis ditched WTI as a benchmark along with Kuwait back in 2009 for the heavier Argus Sour Crude Index (ASCI), based on the medium sour crude from the Gulf of Mexico. The problem for WTI has been the flood of oil flowing into Cushing from areas like North Dakota and Canada. We talked about the production boom taking place in North Dakota previously. Please review the copyright information in the series notes before sharing. IG International Limited is licensed just2trade review to conduct investment business and digital asset business by the Bermuda Monetary Authority.
Unit conversion for Oil (WTI) Price Today
- USD/JPY attracts some buyers during the Asian session and moves away from over a one-month low touched on Wednesday, though any meaningful recovery seems elusive.
- With travel and industrial activity reduced, oil demand decreased, resulting in an oversupply in the market.
- While the two crude oil varieties can trade at similar price points, each one has its own unique supply and demand market, and therefore its price reflects distinct market fundamentals.
- Compared to today’s price of $68.67 per barrel, the price is up by 1.24%.
Discover two of the most popular oil benchmarks in the world – Brent crude and West Texas Intermediate. Here, you’ll learn about the differences between them, and find out how to start trading oil. 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. An easy way to get breaking news about the crude oil market is to create a Google Alert which will email you top news stories about oil as they occur.
Oil benchmarking and pricing
Oil is traded on exchanges, just like shares, but they are traded in the form of oil benchmarks. This enables traders to quickly identify the quality and drilling location of the oil they are buying and selling. Brent crude oil is a blended oil (a mix of brent, forties, oseberg and ekofisk) drilled from below the North Sea. In trading, Brent is one of the benchmarks for oil in the wider market, such as the Middle East, Europe and Africa.
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). This is the light, sweet crude that flows out of Texas wells in the Permian Basin, and it is far more desirable than most, which is why buyers are willing to purchase it at a premium. But WTI’s reign as the global oil benchmark was overthrown by Brent crude in 2013.
These allow oil traders to identify the oil being exchanged immediately (and ultimately delivered). In addition, it enjoys high confidence because of its high grade and the potential for simple processing or refinement of the crude. There was once a time when buyers would primarily purchase crude oil on the spot market—that is, they’d pay the current price and accept delivery within a few weeks. However, after the oil crisis of the late 1970s, refiners and government buyers began looking for a way to minimize the risk of sudden price increases. There has been a trend, due to advancements in oil drilling and fracking, of West Texas Intermediate becoming cheaper than Brent Crude oil. Prior to this, Brent Crude tended to be cheaper than West Texas Crude.