Brent Crude vs West Texas Intermediate WTI: The Differences

Benchmarks also enable traders and investors to track the price of a specific oil type. We want to clarify that IG International does not have an official Line account at this time. We have not established any official presence on Line messaging platform.

Open your IG account now for exposure to live oil markets, or try our risk-free demo. You can invest directly in oil company shares, such as BP or Royal Dutch Shell, and profit if the share price goes up. Investing also enables you to receive dividends, if the company pays them, and earn shareholder rights.

WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media. We also explain what oil blends are (like Brent and how to write rfp for software WTI), and ways you can speculate on live crude oil spot prices without having to buy physical barrels. In December 2005 the global demand for crude oil was 83.3 million barrels per day according to the International Energy Agency (IEA) and this will continue to rise further.

The recent pandemic of 2019 took a toll on almost all sectors of the economy. West Texas Intermediate (WTI) crude oil price dropped significantly in 2020 due to the COVID-19 pandemic. With travel and industrial activity reduced, oil demand decreased, resulting in an oversupply in the market. An oil price war between Russia and Saudi Arabia also contributed to the decline in WTI prices, which hit historic lows in April 2020. You can go long or short on the spot price of Brent crude and WTI oil using derivatives, namely CFDs and spread bets. Derivatives enable you to open a position with a small deposit (margin) and speculate on rising or falling oil prices without ever owning the physical commodity.

What Is The Brent Crude Oil Spot Price?

Other reference oil types include Leona, Tijuana, Alaska North Slope, Zueitina or Urals. The types of crude oil come from regions as diverse as Alaska North Lope, Arab Light or Zueitina in Libya. These are standardised products used to determine the prices for all other types. West Texas Intermediate (WTI) is a grade or mix of crude oil; the term is also used to refer to the spot price, the futures price, or assessed price for that oil.

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

West Texas Intermediate (WTI) is a well-known benchmark for oil prices. The oil futures contract on the New York Mercantile Exchange has WTI as its underlying asset. The U.S. Department of Energy keeps records of past oil price information. The solution came in the form of crude oil futures, which are tied to a specific benchmark crude. With futures, buyers can lock in the price of a commodity several months, or even years, in advance. If the price of the reference crude rises significantly, the purchaser is better off with the futures contract.

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“Sweeter” crudes have less sulfur, which makes them much easier to refine into products like gasoline or diesel, and thus much more attractive to refiners. Yet I’m always surprised that most investors don’t take the time to learn the difference between them. A surge of WTI production has led many traders to consider it an important pricing benchmark vs. Brent, if not even close to the total production of the latter. When trading futures and options, you’ll also use CFDs or spread bets. If you look at the disconnect between the two benchmarks now, and it has narrowed to about $3 – the market has levelled out. The disconnect became very stark at one point – when the US had a domestic glut – now that there is a global glut, there is a convergence of the two benchmarks.

Crude oil is a mixture of hydrocarbons found in liquid form underground review trade your way to financial freedom and brought to the surface for refining into fuel and other products. Petroleum products are processed in refineries from crude oil and other liquids. Petroleum is a broad term that includes both crude oil and petroleum products.

• 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.
• Many futures are settled in cash, although some allow for physical delivery of the commodity.
• The oil is considered to be very light, with a low sulfur content – considerably lighter and sweeter than Brent Crude, Dubai, or Oman.
• This method is preferred by traders with a longer-term view, as positions can be held without paying overnight funding charges.
• Oil benchmarks are frequently referred to in the media as the price of oil.

From a transportation standpoint, oil extracted at sea has certain advantages over land-based supplies, which depend on the capacity of pipelines. Both Brent Crude and WTI are light and sweet, making them ideal for refining into Direct quote currency gasoline. Because Brent is extracted at sea and not on land, there are certain advantages. Large volumes of oil can quickly and safely be transported in underwater pipelines. In the US, however, the production advantage lies in new extraction technologies, such as well stimulation techniques and horizontal drilling.

That’s down by 2.05% from the price of $70.11 per barrel one week ago. If you check live prices on Saturdays, you will always see the last recorded WTI crude price from the previous Friday. Though there are some correlations in composition and usage, all crude oils are not priced equally. The difference between the spot price of Brent crude and WTI is called the Brent/WTI spread. Factors related to supply and demand, including production interruptions and geopolitical influences, can widen the spread.