WEST TEXAS INTERMEDIATE & BRENT CRUDE

WEST TEXAS INTERMEDIATE & BRENT CRUDE

Subject : Economy

Context : Oil prices soared on Monday to their highest in about 13 months as vaccine roll-outs promised to revive demand and producers kept supply reined in.

Concept :

• Brent crude was up 77 cents, or 1.2%, at $63.20 a barrel, after climbing to a session high of $63.76, the highest since January 22, 2020. U.S. West Texas Intermediate (WTI) crude futures gained $1.04, or 1.8%, to $60.51 a barrel.

Brent and WTI

• Brent crude oil originates from oil fields in the North Sea between the Shetland Islands and Norway, while West Texas Intermediate (WTI) is sourced from US oil fields, primarily in Texas, Louisiana, and North Dakota.
• WTI with a lower sulphur content (0.24%) than Brent (0.37%), is considered “sweeter”.
• Both oils are relatively light, but Brent has a slightly higher API gravity, making WTI the lighter of the two.
• American Petroleum Institute (API) gravity is an indicator of the density of crude oil or refined products.
• Brent crude price is the international benchmark price used by the OPEC while WTI crude price is a benchmark for US oil prices.
• Since India imports primarily from OPEC countries, Brent is the benchmark for oil prices in India.
• Cost of shipping for Brent crude is typically lower, since it is produced near the sea and it can be put on ships immediately. Shipping of WTI is priced higher since it is produced in landlocked areas like Cushing, Oklahoma where the storage facilities are limited.