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-
Why do we need this classification?
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 –
Brent Blend-
- 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.
Dubai/Oman
- This is Middle Eastern crude from Dubai, Oman or Abu Dhabi
- Heavier & Higher sulfur content.
