Oil Bench marking
Now-a-days oil pricing are decreasing, Oil producing countries are producing oil in spite of the less demand in market, leading to imbalance in demand & supply hence fall in prices.
Many a times you would have seen terminologies like Brent, WTI etc and wondered what is it all about??
So here I am, helping you to know more in detail-
Buyers of crude oil, along with speculators need an easy way to value the commodity based on its quality and location.Benchmarks such as Brent, WTI and Dubai/Oman serve this important purpose.This classification helps them to have a good idea about source, & origin of the oil.
Remember: Due to Dynamic nature of supply and demand, the value of each benchmark keeps on changing.
Main Three Benchmarks –
- Roughly two-third of oil contract around the world prefer this one.
- Brent actually refers to oil from four different fields in the North Sea: Brent, Forties, Oseberg and Ekofisk.
- Crude is light and sweet, hence ideal for the refining of diesel fuel, gasoline and other high-demand products.
- Easy to transport to a distant locations.
West Texas Intermediate (WTI)
- WTI refers to oil extracted from wells in the U.S. and sent via pipeline to Cushing, Oklahoma.
- Light and very sweet, ideal for gasoline refining
- Relatively expensive to ship to certain parts of the globe
- Benchmark for oil consumed in the United States.
- This is Middle Eastern crude from Dubai, Oman or Abu Dhabi
- Heavier & Higher sulfur content.