Most people don’t know that oil is priced depending on the region it comes from. WTI and Brent crude oil are two of those variations. This article explains the difference between the two.
|WTI||Brent Crude Oil|
|API gravity is about 39.6 and specific gravity of about 0.827||API gravity is about 38.06 and specific gravity of about 0.835|
|Contains 0.24% sulfur||Contains 0.37% sulfur|
|Extracted in Texas, Louisiana, and North Dakota||Extracted from oil wells in the North Sea|
WTI, or West Texas Intermediate, is one of the most common benchmarks used in crude oil pricing that comes from the US. It traded closely with other benchmarks in the past, but it is now offered at lower price points. It is known as Light Sweet Crude due to its low density and sweetness because of its low sulfur content. Most of the WTI oil comes from the Permian oil field and are delivered using pipelines to Cushing, Oklahoma. This made Cushing a major oil trading hub and the price settlement point for WTI on the New York Mercantile Exchange for more than 30 years.
The price of WTI is usually used in news reports when it comes to oil pricing.West Texas Intermediate oil is expensive as it needs to be delivered using oil tankers.
WTI grade crude oil is light, with a 39.6 API gravity. An API greater than 10 means it is lighter and floats on water. It has an estimated specific gravity of 0.827 (ratio of substance density to mass of reference substance). Its low, 0.24% sulfur content gives it its sweet crude oil rating. Petroleum with high sulfur levels is called sour crude oil.
Brent crude oil is an oil grade which serves as one of the major benchmarks for trading crude oil worldwide. This oil grade has a low density and a low sulfur content. Brent crude comes from the North Sea and makes up Brent Blend, Oseberg, Forties Blend, and Ekofisk.
Brent crude was once produced from the Brent oilfields. It was also an acronym for the different formation layers of the oil field namely; broom, rannoch, etive, ness, and tarbert. The Brent blend has a low sulfur content of 0.37% and is thus classified as sweet crude. Brent is characterized by and API gravity of about 38.06 and an equivalent specific gravity of 0.835.
In the past, the price of Brent crude and other benchmark crude has always been dictated by physical differences in crude oil and short-term fluctuations in supply and demand. However, the price of Brent crude has been gradually placed at higher level compared to other benchmarks. Many explanations were offered to explain why this was happening. The United States Energy Information explains the big spread as caused by an oversupply of crude oil in North America which is caused by a sharp increase in oil output from Canadian oil sands and tight oil formations which include Niobrara and Bakken Formations.
WTI vs Brent Crude Oil
So what’s the difference between WTI and Brent crude oil? WTI, or West Texas Intermediate is a grade of crude oil that is used as one of the several benchmarks in setting oil prices. It is also referred to as Texas light because of its low density and low sulfur content which causes the sweet taste. Brent crude oil is another oil grade used as a benchmark in oil prices all over the world. It is extracted from the North Sea and is the leading oil price benchmark of crude oil extracted from the Atlantic. Two thirds of the world’s traded crude oil supplies use this as a pricing benchmark.
Check out this in-depth slideshow presentation about WTI and Brent crude oil.