日本語
Español
中文
Русский
- New York 08:42
- London 13:42
- Barcelona 14:42
- Tokyo 22:42
- Sydney 00:42
5
0
Oil Basis − Grades Of Crude Oil
Wed, Dec 10 2008, 16:48 GMT
by Oil N' Gold Team
Oil N' Gold
More Analysis and Technicals on Crude Oil, Natural Gas, Gold & SilverMany readers asked why London Brent crude futures price is always lower than Nymex WTI crude oil price. There's nothing related to exchange rate but quality of oil.
Crude oil is classified into various grades according to density (heavy vs light) and sulphur content (sour vs sweet). The lighter and sweeter the crude, the higher the price it can be sold, because refiners can produce higher yield of high quality refined products from it.
Density is measured by API gravity, a measure developed to compare the density of petroleum with water (API > 10 means the liquid floats on water) but is now widely used to compare among crude oils. API degree is inversely related to the density of crude oil. In general, crudes of API between 40-45 degrees can be sold at greatest commercial values.
Sulphur content determines the quality of a crude oil. Sulphur is a corrosive material which decreases the purity of a crude oil. Therefore, a crude oil with high sulphur content (sour crude) should sell cheaper than one with low sulphur content (sweet crude).
WTI Crude
West Texas Intermediate (WTI) crude oil is of very high quality. It has API gravity of 39.6 and sulphur content of 0.24% only. Its low density and low sulphur content gave it the name 'light, sweet crude' and enabled refiners to produce high yield of gasoline. Most WTI crude oil gets refined in the Midwest region of the country, with some more refined within the Gulf Coast region.
This type of crude oil is used as a benchmark in oil pricing and the underlying commodity of NYMEX's oil futures contracts. Due to its 'lightness' and 'sweetness', WTI crude is normally selling at about $1-$2/ barrel premium to Brent.
Brent
Brent is actually a blend of crude oil from 15 different oil fields the North Sea. It has API gravity of 38.3 degrees and sulphur content of around 0.37%. From these 2 parameters, we can see that Brent crude oil is heavier and less sweet than WTI crude. Therefore, its price is generally lower. Brent is suitable for refinery of gasoline and middle distillates.
Brent was first traded on International Petroleum Exchange in London and then on IntercontinentalExchange (ICE) since 2005. Typically, price of Brent crude oil is around $1 lower than WTI. However, in 2007, due to the depletion of the North Sea Oil field, Brent Crude futures had traded at a premium to WTI of approximately $1 to $3 per barrel.
Published on Wed, Dec 10 2008, 16:48 GMT
Action Forex Company Limited
| Room 1707, 17/F Treasure Centre 42 Hung To Road Kwun Tong, Kowloon
http://www.oilngold.com/ | contact@oilngold.com
Legal disclaimer and risk disclosure
Oil N' Gold does not guarantee the accuracy of the reports and trading recommendations provided. Any market recommendations of, or information provided by Oil N' Gold do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any foreign exchange transaction.Related reports
Commodities Daily - Commodities have generally benefited from an increase in risk appetite overnight by Danske Bank A/S
Mon, Nov 23 2009, 12:01 GMT
Crude Oil Daily Technical Outlook by Oil N' Gold
Mon, Nov 23 2009, 11:27 GMT
Today's Trading Signals by Financial Trend Analysis
Mon, Nov 23 2009, 08:42 GMT
Weekly Commodity Update - Gold shines despite signs of risk fatigue by Saxo Bank
Mon, Nov 23 2009, 08:12 GMT
Markets Chartist Technical Analysis - WTI Oil & Brent Crude by Charmer Charts.com
Mon, Nov 23 2009, 07:36 GMT
oil, commodities, crude, energies
View AllRelated content
OIL DATA: Table Of China October Oil, Oil Product -2-
Dow Jones | Mon, Nov 23 2009, 05:05 GMT
OIL DATA: Table Of China October Oil, Oil Product Exports
Dow Jones | Mon, Nov 23 2009, 05:05 GMT
OIL DATA: Table Of China October Oil, Oil -2-
Dow Jones | Mon, Nov 23 2009, 04:44 GMT
OIL DATA: Table Of China October Oil, Oil Product, LNG Imports
Dow Jones | Mon, Nov 23 2009, 04:44 GMT
China October Pulp Imports 1.07 Mln Tons; Up 55% On Year
Dow Jones | Mon, Nov 23 2009, 04:08 GMT
oil, commodities, crude, energies
View AllInterested in forex trading? forex brokerage firms!
GET CASH BACK FOR YOUR TRADES! Learn more about the Pip Rebate Program
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.
Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website, by FXstreet.com, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXstreet.com will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
©2009 "FXstreet.com. The Forex Market" All Rights Reserved.