Brent vs WTI Crude Oil What is the Difference?

Soon after, the coronavirus pandemic sparked an oil storage crisis, which caused US crude to crash from $18.00 a barrel to -$38.00. This was the first time in history that the oil price fell to negative value. Additionally, their sulfur content is different, which determines if one is sweeter than the other.

The increased focus on renewable energy is already accelerating such changes. Simply put, the preference for Brent crude today stems from the fact that it may be a better indicator of global oil prices. Brent essentially draws its oil from more than a dozen oil fields located in the North Sea.

• The most important type of crude oil used in Europe is Brent Crude, named after the North Sea oilfield where it is extracted.
• When refiners purchase a Brent contract, they have a strong idea of how good the oil will be and where it will come from.
• The increased focus on renewable energy is already accelerating such changes.
• This Middle Eastern crude is a useful reference for oil of a slightly lower grade than WTI or Brent.

WTI has less sulfur than Brent, making it sweeter, and, therefore, easier to refine. Investors can also gamble on what will happen to the difference, or spread, between two benchmarks. Participants typically analyze the fundamentals of a specific oil source and guess whether the how to write rfp for software gap between two markers will widen or close.

What is West Texas Intermediate (WTI)? Definition and Meaning

From time to time new oil resources come online — like Canadian oil sands or US crude oil from oil shale — these add to the global supply. New sources can exert a downward force on oil prices, even in times of heavy demand. West Texas Intermediate (WTI), also known as Texas Light Sweet on occasion, is a key oil benchmark in the commodities market. 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.”

Therefore, any accounts claiming to represent IG International on Line are unauthorized and should be considered as fake. 72% of retail client accounts lose money when trading CFDs, with this investment provider. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. The oil is considered to be very light, with a low sulfur content – considerably lighter and sweeter than Brent Crude, Dubai, or Oman. WTI and Brent, however, are both considered high-quality oils and therefore are the two most important oil benchmarks in the world. The real-time price of Brent crude oil is at $72.88 per barrel, and the price of WTI crude oil is at $68.67 per barrel.

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Today’s WTI crude oil spot price of $68.67 per barrel is down 2.05% compared to one week ago at $70.11 per barrel. Today’s Brent crude oil spot price is at $72.88 per barrel, up by 0.91% from the previous trading day. In comparison to one week ago ($73.88 per barrel), Brent oil is down 1.35%. Brent is traded at higher prices, serving as a global benchmark covering a larger geographic area. It serves as a more comprehensive indicator of global oil prices; additionally, Brent has higher transportation expenses and larger supply uncertainties.

The Battle of the Benchmarks: Brent vs. WTI

Alongside writing and editing, Marko works on projects related to online technology and digital marketing. Regardless of how far behind they were, U.S. producers hit the ground running. Since Congress lifted the ban, the West Texas oil field has nearly doubled its daily production levels.

Read on to learn more about the live crude oil price you see historically, or on active trading days. WTI crude had a series of rallies and tumbles to reach a year-high price of $84.06 per barrel in late October 2021. WTI has an API gravity of about 39.6, making it quite light (having an API gravity over 10 means the petroleum is lighter and floats on water). WTI is valued as light oil, similar to Brent, but it doesn’t have the same worldwide reach. One factor contributing to this is that the United States generally forbids crude oil export (except for a few).

This Middle Eastern crude is a useful reference for oil of a slightly lower grade than WTI or Brent. 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. The Dubai benchmark is the main reference for Persian Gulf oil delivered to the Asian market. Most nations factor oil prices into their budgets, so OPEC has been considered a leading geopolitical force. Another example is the 2020 oil price war between Russia and Saudi Arabia, known as the OPEC crash. Brent crude plummeted to $33.36 (down by 24%) and US oil prices tumbled to $27.34 (down by around 34%).

Like review asset pricing and portfolio choice theory traditional oil options, these “spread options” are available on major exchanges. The price of oil is a major factor in the overall health of the energy sector and is one of the most heavily traded commodities as it is influenced by almost every global, macro event. Brent Crude is the benchmark used for the light oil market in Europe, Africa, and the Middle East, originating from oil fields in the North Sea between the Shetland Islands and Norway. West Texas Intermediate is the benchmark for the U.S. light oil market and is sourced from U.S. oil fields.

The US investment bank Goldman Sachs estimates the proportion of crude oil used for primary materials production to be 45 per cent. In December 2005 the global demand for crude oil was 83.3 million barrels per day according to the International Energy Agency (IEA) and will rise further. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude.

The commodity of crude oil is by far the world’s most important energy source and the price of oil therefore plays an important role in industrial and economic development. The most important type of crude oil used in Europe is Brent Crude, named after the North Sea oilfield where it is extracted. Brent Crude is a particularly light crude oil which is carried from the North Sea to the Sullom Voe Terminal on Mainland, Shetland by an underwater pipeline. Crude oil is by far the world’s most important energy source and the price of oil therefore plays an important role in industrial Day trading strategies and economic development. Technological developments and changes in resource distributions along the oil supply chain will also impact crude oil spot prices.

It contains less than 0.50% sulfur, whereas the norm is about 0.24% to 0.34%, making it “sweet.” It also has a low density, making it “light.” Ripple’s XRP rallied 6% on Wednesday following increased buying pressure among whales in the past two weeks. The remittance-based token could stage a move to $2.58 amid increased institutional interest in the launch of an XRP exchange-traded fund (ETF) in the US. Brent crude oil opened the year of 2020 amidst an uptrend that began in November 2020 from $38.84 per barrel and continued the rally to $68.72 per barrel until early March 2021. I fully expect crude prices to march higher throughout the rest of the year, if not the decade. The United States recently reclaimed its crown as the world’s top oil producer, averaging just under 20 million barrels per day.