Actually there are more that two types. There might be dozens, but I stumbled across a website that provides price charts for two of them.
I'm not going to put in my sidebar because I am not interested in the daily fluctuations of the price of oil. It's like a three year old hopped up on candy, he's bouncing off the walls continuously. Who knows where he's going next? If he ever achieves escape velocity and busts a hole in the wall, well, that might be worth noting.
WTI Crude Oil is West Texas Intermediate and Brent Crude Oil is from the North Sea. Crude oil is supposedly categorized by properties such as density and sulfer content. WTI and Brent have slightly different specifications. I suspect that the names come from the places where these kind of oils first originated. I can't tell whether any oil from anyplace other than Texas is ever categorized as WTI, or whether oil from Saudi Arabia is ever categorized as Brent.
WTI used to be the standard of the world on account of it was so superior. (Superior crude? Isn't that an oxymoron?) That it's fallen out of favor seems to be a bit of surprise to some people. (Today WTI is $88 a barrel and Brent is $109.) I suspect it is because the demand for oil outside of the US has gone up. I imagine we (the USA) consume all of the WTI, so even if somebody else wanted some, there may not even be facilities to deliver it, whereas all other oil producers pretty much export the bulk of their production. So if you are outside the US and you want oil, you're going to have to get it from somewhere else. 'Course, I could be all wet, and there is some other factor in play, like all of the major oil traders have lost their collective minds. I mean, who knows?
Living in the oil patch as I do, I had to learn much of this stuff in self-defense.
ReplyDeleteWTI is lighter and sweeter than the global norm, and the Chicago Exchange sells futures in it, deliverable to Cushing, Oklahoma. Most of it is indeed refined in the Central time zone.
Brent is a little heavier and a bit more sour. One of the reasons Brent has gone up of late is that there is fear of depletion of the North Sea reserves, while we keep finding more oil stateside despite the best efforts of the Feds.
On the other hand, I would not rule out the possibility of all the traders having gone crazy.
Excellent! I am always glad to have someone agree with me, even if it's by lack of disagreement.
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