What are the two most important benchmark crude oils?

These benchmarks are typically referred to as the “price of oil.” WTI and Brent crude have diverse properties, and their price difference is called the “quality spread” or the “Brent-WTI spread.” Both types of crude, however, are considered the two most important oil benchmarks worldwide.

What is the benchmark of OPEC crude oil?

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Brent Crude is a mix of crude oil from 15 different oil fields in the North Sea. It is the benchmark used primarily in Europe though it is also mixed in with the OPEC reference basket which is used around the world.

What is the relationship between crude oil and natural gas?

Crude oil and natural gas are both energy commodities. We use these fuels to heat and cool our homes or supply other energy needs. The price relationship between crude oil and natural gas is an inter-commodity spread. This means that the prices between the two change in relation to each other.

What are the crude benchmarks why are they important for international crude trading process?

Benchmark crude oil is the petroleum that serves as a pricing reference for other types of oil and oil-based securities. The benchmark or crude oil markers make it easier for traders, investors, analysts, and others to determine the prices of multiple grades of crude oil varieties and blends.

Is WTI a benchmark?

West Texas Intermediate (WTI) is a light, sweet crude oil that serves as one of the main global oil benchmarks. It is sourced primarily from inland Texas and is one of the highest quality oils in the world, which is easy to refine. WTI is the underlying commodity for the NYMEX’s oil futures contract.

How is natural gas different from oil?

The biggest difference between Crude Oil and Natural Gas is their molecular makeup. Crude Oil is comprised of a wide and diverse selection of complex hydrocarbons. Natural Gas is also made up of a mixture of different hydrocarbons, such as gasses like ethane, propane, butane, and pentane.

Do natural gas prices follow oil prices?

The observations above suggest that oil has been the dominating factor in any observed relationship between the price of crude oil and natural gas (in other words, oil prices have a higher tendency to affect natural gas prices rather than vice versa).

Why is Brent cheaper than WTI?

Another reason is that WTI supplies are produced in landlocked areas, and nowadays need to be transported to the coast, where most refineries are located. Because of growth in U.S. oil production, there’s a glut of oil supply in the U.S. midwest. So WTI now trades at a price “discount” to Brent oil.

Why is Brent crude used as a benchmark?

The Brent benchmark is used to price over three-quarters of the world’s traded oil, as one of the most liquid crude grades. It is processed by refiners around the world. This confers an advantage over other crudes which are landlocked and regional.